Pepsi Earnings Slip 5% on Higher Costs

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PepsiCo Inc.'s (PEP) fourth-quarter net income fell 5 percent because of higher costs, despite a surge in revenue due to acquiring its bottlers.

The maker of soft drinks, Frito-Lay snacks and Quaker cereal also cut its 2011 earnings forecast. Shares fell nearly 3 percent in premarket trading.

Net income fell to $1.37 billion, or 85 cents per share, matching analyst expectations, according to FactSet. That's down from $1.43 billion, or 90 cents per share, last year.

Revenue rose 37 percent to $18.16 billion, helped by acquiring its two biggest bottlers. PepsiCo sold 9 percent more of its products.

CEO Indra Nooyi sounded a cautious note for 2011. She says consumers remain pressured by high unemployment and costs for raw materials are expected to remain high. Competition, especially with rival Coca-Cola Co., remains stiff, and Pepsi's numbers suggest Coke is taking business.

Still, the company expects buying its bottlers and its $3.8 billion acquisition of Russian food company Wimm-Bill-Dann Foods will help results.

Pepsi now expects earnings per share growth of 7 percent to 8 percent. It previously forecast growth of 10 percent to 11 percent.

Pepsi's Frito-Lay snack division volume rose slightly. PepsiCo Americas Beverages volume rose 1 percent.

For the full year, net income rose 6 percent to $6.32 billion, or $3.91 per share, from $5.95 billion, or $3.77 per share last year.

Revenue rose 34 percent to $57.84 billion from $43.23 billion a year ago.

Rival Coca-Cola Co. said Wednesday fourth-quarter net income more than tripled on the acquisition of a bottler and stronger sales of its drinks worldwide.

Shares fell $1.62, or 2.5 percent, to $62.80 during midday trading.


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