Pepsi to Cut Jobs as Third-Quarter Net Falls

PepsiCo(PEP Quote) said third-quarter net income fell from a year earlier and the snack and beverage maker said it plans to eliminate 3,300 positions under a program to cut costs.

Pepsi reported third-quarter earnings of $1.6 billion, or 99 cents a share, compared with $1.7 billion, or $1.06 a share, a year earlier. Excluding mark-to-market accounting, earnings in the latest quarter were $1.06 a share. Analysts surveyed by Thomson Reuters expected Pepsi to earn $1.08 a share.

In a statement Tuesday, Pepsi said the quarter was hurt by continued weakness in its U.S. liquid refreshment beverage category, which resulted in disappointing performance in its domestic beverage business.

Net revenue in the quarter rose 11% to $11.2 billion from $10.2 billion.

Pepsi said it expects the cost-saving plan will produce $1.2 billion in pretax savings over three years. The company said the majority of the savings will be invested in its businesses, and a primary focus will be restoring growth to the North American beverage business.

Pepsi said about 3,300 positions will be eliminated, of which about 40% relate to the closing of up to six plants and other capacity rationalization actions, which will be announced by the end of the year. The company expects to incur a pretax charge of about $550 million to $600 million in the fourth quarter.

Pepsi also lowered its full-year guidance and said it now expects to report core earnings of $3.67 to $3.68 a share, vs. prior guidance of $3.72 a share. The company said the recent rise in the U.S. dollar will likely have an impact of 4 cents to 5 cents a share in the fourth quarter.