US soft drinks and snacks giant PepsiCo has reported a 12% rise in second-quarter net income and said its outlook for 2004 was “very positive”.
The company posted net income of US$1.06bn for the second quarter to 12 June, compared to $944m in the same period of last year. Revenue rose 8% to $7.07bn.
PepsiCo’s snacks unit Frito-Lay North America posted a 4% rise in revenue to $2.24bn, and a 6% rise in operating profit to $560m. The company said strong growth in its salty snacks business had been partially offset by weakness in its Quaker snacks unit.
Growth in the core salty snacks business was driven by the continuing rollout of Lay’s Stax Potato Crisps and the successful introduction of Doritos Rollitos. However, the company said two new product introductions in its Quaker snacks unit, Crisp’ums and Fruit & Oatmeal Toastables, were not meeting expectations.
The company’s Quaker Foods unit posted a 2% decline in revenue to $303m, and a 2% decline in operating profit to $91m for the second quarter.
Volume declines were driven by continued softness in Pasta Roni and Near East side dishes. Ready-To-Eat cereal volume declined, as softness in Cap’n Crunch was offset by the successful introduction of Honey Graham Life cereal. The decrease in second-quarter operating profit was principally due to reduced revenue.
PepsiCo said that over the balance of the year, Quaker Foods will address consumer demand for products with less sugar and higher-protein content. In the third quarter, it will launch Quaker Instant Oatmeal that is 50% lower in sugar than regular instant oatmeal, as well as “Cheesy Pleasers”, a line of cheese-enriched Rice-a-Roni side dishes.
Overall, CEO Steve Reinemund said PepsiCo’s outlook for 2004 remains very positive. The company is targeting 2004 earnings-per-share of at least $2.29.
