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Business News/ Companies / PepsiCo profit rises 13% giving CEO respite from Peltz push
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PepsiCo profit rises 13% giving CEO respite from Peltz push

Net income increased 13% to $1.22 billion, or 79 cents a share, from $1.08 billion, or 69 cents, a year earlier

PepsiCo rose 0.9 % to $85.55 at the close in New York. The shares have increased 3.1% this year, while the Standard & Poor’s 500 Index added less than 1%. Photo: Priyanka Parashar/MintPremium
PepsiCo rose 0.9 % to $85.55 at the close in New York. The shares have increased 3.1% this year, while the Standard & Poor’s 500 Index added less than 1%. Photo: Priyanka Parashar/Mint

Atlanta:PepsiCo Inc chief executive officer Indra Nooyi has earned the company a reprieve for at least another quarter.

The owner of Gatorade and Lays boosted profit more than analysts estimated in the first quarter and increased revenue for snacks and beverages globally, excluding the negative impact from currency fluctuation. The results will help Purchase, New York-based PepsiCo fend off calls by activist investor Nelson Peltz to separate its dominant snacks business from the struggling North American beverages unit.

Nooyi and the company’s board have stood firm against relentless pressure from Peltz, who wants to split PepsiCo to slash costs, allow more focused marketing and spur faster growth. Nooyi has responded with a pledge to improve performance and cut $5 billion in costs over five years starting in 2015, extending a plan already under way.

This aids management’s defense of its one-co decision but also think management remains in an active conflict with shareholders, Mark Swartzberg, an analyst for Stifel Financial Corp in New York, said in a note on Thursday.

Peltz, whose Trian Fund Management LP owns 0.8% of PepsiCo, last month called on directors to meet shareholders without Nooyi and her management team. He also demanded that the company consolidate four headquarters facilities into two and disclose returns from bottler acquisitions.

Organic revenue, which strips out currency fluctuation and the effect of structural changes, rose 5% for snacks globally and 3% for beverages, the company said today in a statement. Profit excluding some items totaled 83 cents a share. The average of 16 analysts’ estimates compiled by Bloomberg was 75 cents.

Shares rise

Investors are likely to be very happy with what they are seeing out of PepsiCo right now, chief financial officer Hugh Johnston said in an interview. I don’t know why you’d want to disrupt it.

PepsiCo rose 0.9 % to $85.55 at the close in New York. The shares have increased 3.1% this year, while the Standard & Poor’s 500 Index added less than 1%.

Revenue advanced 0.3% $12.6 billion, beating the $12.4 billion average of analysts’ estimates. Net income increased 13% to $1.22 billion, or 79 cents a share, from $1.08 billion, or 69 cents, a year earlier.

PepsiCo Americas Beverages volume was little changed in the quarter, an improvement from a 3% decline a year ago. A 1% soft drink decline was offset in part by a 2% increase in non-carbonated beverages in North America. In Latin America, declines in Mexico spurred by new soft drink taxes depressed volume by 1%. BLOOMBERG

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Published: 18 Apr 2014, 03:43 PM IST
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