By Martinne Geller
NEW YORK (Reuters) - PepsiCo Inc
PepsiCo, which just bought its North American bottlers, said it was boosting investment in innovation, research and development and infrastructure in the current quarter. It said the moves should help accelerate growth in the second half of the year.
PepsiCo Chief Executive Indra Nooyi said on a conference call that North American beverage volume trends were improving across the board and noted the company was also facing tougher comparisons with a strong first half of 2009.
In the first quarter that ended on March 20, net income was $1.43 billion, or 89 cents per share, up from $1.14 billion, or 72 cents per share, a year earlier.
Excluding items such as a one-time gain on previously held equity interests, merger charges and the impact of Venezuela's currency devaluation, earnings were 76 cents per share.
Analysts on average were expecting earnings of 75 cents per share, according to Thomson Reuters I/B/E/S.
Revenue rose 13 percent to $9.37 billion, but fell short of analysts' estimates, which called for $9.57 billion. Archrival Coca-Cola Co
Still, the maker of Pepsi-Cola and Frito-Lay snacks affirmed its 2010 profit target, which calls for earnings per share to grow 11 percent to 13 percent, excluding currency fluctuations.
The forecast assumes 6 percent earnings growth in the first half of the year and mid-teens growth in the second half. The first half includes a charge of about $40 million related to the healthcare reform bill.
PepsiCo shares fell 8 cents to $65.90 in premarket trading.
SNACKS STRONG IN INDIA, CHINA
PepsiCo just acquired its largest bottlers for $7.8 billion to have more control over the distribution of its drinks in North America. Aside from giving it more flexibility and speed in developing new products, Pepsi sees $400 million of cost savings from the deal.
Coke is doing a similar deal, but it is not expected to close until the fourth quarter, giving Pepsi a head start of six months or more.
PepsiCo said snack sales by volume rose 1 percent, boosted by growth in markets such as India and China, which helped offset a 0.5 percent volume decline in its beverage business.
Volume in its Americas beverages business fell 4 percent. Volume in its Americas foods business rose 1 percent, with its Latin America and Frito-Lay North America volume up 1 percent and its Quaker Foods North America sales down 1 percent.
In Europe, the volume of snacks and beverages both fell 4 percent, while the Africa, Middle East and Asia division saw a 13 percent gain in snacks and a 10 percent gain in drinks.
(Reporting by Martinne Geller; Editing by Lisa Von Ahn and Maureen Bavdek)
