PURCHASE, N.Y. (
showed the beverage and snack maker has been successful in passing on higher costs to consumers.
Standard & Poor's analyst Esther Kwon was encouraged by the company's reiteration of its 2011 earnings guidance, particularly as the boost from foreign exchange was less robust. Kwon maintained a buy rating on the stock but cut her price target by $1 to $70.
Beverage volume in the Americas was "lackluster" because of a decline in sales of carbonated soft drinks, Kwon said, although this was somewhat offset by gains in non-carbonated drinks.
Pepsi's 13% jump in total revenue, to $17.58 billion, was led by 33%
, helped in part by the company's recent
On an adjusted basis, Pepsi earned $2 billion, or $1.31 per share, in its recent quarter, topping expectations by a penny.
To offset these rising costs, Pepsi said it would implement previously announced incremental price increases. On Wednesday, the company maintained its forecast for high-single-digit core EPS growth from its fiscal 2010 profit of $4.13 a share. In July, analysts had expected Pepsi to earn $4.50 a share for fiscal 2011, but the consensus has since dropped to $4.41.
While demand in developed markets has waned somewhat, the opposite is true in emerging markets like Brazil, Russia and India, where disposable income among consumers is growing. Pepsi's exclusive contract with
to serve Pepsi products in its restaurants also helps, particularly in the fast-growing market of China.
Yum, which operates Taco Bell, Pizza Hut and KFC restaurants, last week matched quarterly profit expectations as continued strong performance in China drove year-over-year revenue growth of more than 14%
As of earlier this year
. 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 have 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.
Over the last three months, Coke shares have fallen less than 0.1%, while Pepsi lost around 8.3%. Dr Pepper Snapple's stock is lower by around 4.3% in the same period.
On Wednesday Pepsi shares rose 3.9%, thanks to its earnings beat, to trade around $63.31.
Written by Miriam Marcus Reimer in New York.
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