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(PEP) - Get PepsiCo, Inc. Report

matched profit expectations for the second quarter as net income and revenue grew by double-digits thanks to strength in its snacks division and in emerging markets. But the company will raise prices again as costs and weaker consumer spending pressure results.

Pepsi booked a second-quarter net profit of $1.89 billion, or $1.17 a share. On an adjusted basis, earnings came in at $1.21 a share, matching Wall Street's expectations. In the year-earlier period, Pepsi earned $1.6 billion, or $1.09 a share on an adjusted basis.

Net revenue increased 13.7% to $16.83 billion, topping expectations for a top line of $16.41 billion. Revenue a year ago was $14.8 billion.

>> Coke Plans More Price Hikes as Costs Rise

Pepsi shares were 1.5% lower in premarket trading Thursday after closing 0.1% lower at $68.49 on Wednesday.

Pepsi said results were driven by revenue gains across its portfolio of global snacks and beverages businesses, and from the acquisition of Russian dairy and juice company



>> Consumer Products You Pay More For

Pepsi also updated its full-year 2011 guidance, and now expects high-single-digit EPS growth on a core, 52-week basis, compared with a fiscal 2010 profit of $4.13 a share. Analysts expect Pepsi to earn $4.50 a share for the year.

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Pepsi said worldwide snacks volume grew 10%, while worldwide beverage volume grew 5%.

To offset rising costs and a still-weak North American consumer spending market, Pepsi said it would implement previously announced incremental price increases in the current quarter.

As of earlier this year,

Pepsi had been able to better manage the risk of rising commodity costs than Coca-Cola

(KO) - Get Coca-Cola Company Report

. Pepsi had turned to improved operational efficiencies and price increases to help offset those costs, but Chief Financial Officer Hugh Johnston conceded in April that pricing in the first half of the year "has not been what we would have liked or expected."

Costs for plastic bottles and fuel to transport beverages has risen as oil prices heated up this year. Oil prices affect the price of polyethylene terephthalate, or PET, the plastic used by beverage companies to make soda bottles. Coke, Pepsi,

Dr Pepper Snapple


and other beverage makers cannot hedge the prices they pay for PET because the material is not traded like other commodities.

Beverage giant Coca-Cola beat profit expectations by a penny on Tuesday as volume growth rose 6%.

>> Consumer Dividend Stocks Increasing Payouts

Coke earned $2.8 billion, or $1.20 a share, with comparable EPS at $1.17 a share. Revenue in the second quarter rose 47% to $12.7 billion on, among other things, strong growth in concentrate sales and the acquisition of Coca-Cola Enterprises' North American operations in the fourth quarter of 2010.

Both PepsiCo and Coca-Cola recently purchased their largest bottlers, hoping to streamline production and distribution costs. Coca-Cola bought out

Coca-Cola Enterprises


in October of last year in a $3.4 billion acquisition. Earlier, PepsiCo acquired two of its bottlers.

>>For upcoming earnings and estimates, see our

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That means the pair is even more acutely affected by bottling costs than they had been before integrating the bottlers' cost of operations into their own.


Written by Miriam Marcus Reimer in New York.

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Miriam Reimer


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