Quarterly profit and sales at the beverage and snack giant rose and topped Wall Street's forecasts. But as Fred Katayama reports, analysts are concerned about its beverage business.
Higher prices put some fizz in PepsiCo's results. Raising prices helped offset falling demand for its carbonated drinks, pushing up quarterly profit and sales at the food and snacks giant. Also boosting its bottom line: the sale of a minority stake in British bottler, Britvic. Sales rose despite flat volume at its North American beverage unit that produces Pepsi and Gatorade. PepsiCo also pumped up revenue at its Frito-Lay snacks business. RBC Capital Markets analyst Nik Modi said, "The issue is a lot of the top line was driven by pricing. It looks like they're continuing to struggle on the beverage side, and that will get tougher as Coke gets its act together." Looking ahead, PepsiCo sees foreign exchange having less of an adverse impact, so it raised its earnings forecast for the full year. PepsiCo's earnings surpassed Wall Street's targets, but its shares fell at the market open, trimming their 9 percent gain this year.