PepsiCo has posted a better-than-expected rise in profits for the third quarter. Excluding charges, the US company said today (29 September) that income for the three months to 3 September was up by 18% year-on-year to US$0.78 per share, while net sales rose by 13%.

A charge of US$468m, or US$0.27 per share, levied on the repatriation of US$7.5bn in international profits under the American Jobs Creation Act, however, pegged profits back to US$0.51 per share.

Net earnings for the three-month period totalled US$864m compared to US$1.36bn in the corresponding quarter last year. Sales were up to US$8.18bn from US$7.26bn in value and by 8% in volume.

In a statement, PepsiCo chairman and CEO Steve Reinemund said: "We are very pleased with our performance for the quarter, especially on the top line. Each of our operating divisions contributed to the very positive overall results. Our international operations, in particular, continue to perform very well, and our North American beverage business capitalised on strong weather-driven demand to deliver an outstanding quarter.

""Looking ahead to the fourth quarter," Reinemund continued, "we are encouraged by the momentum in our businesses, but we expect the recent hurricanes to negatively affect some key input costs and, potentially, consumer spending. We are not unique in having to address these challenges, but clearly must acknowledge them.
"All that said, given the strength of our third quarter, and recognizing the near-term cost- and economic challenges, I believe we will exceed our previously stated 2005 operating and financial objectives."

PepsiCo Beverages North America (PBNA) saw volumes increase by 8%, led by Gatorade growth, as net revenue and operating profit grew at mid-teens rate.

PBNA reported record volume growth of 8%, fuelled by 24% growth in its non- carbonated beverage portfolio. Non-carbonated beverage results were driven by strong double-digit growth in Gatorade, trademark Aquafina, and Propel, PepsiCo said. These products benefited from above-average temperatures across North America, which created strong consumer demand, and from successful new products such as Gatorade Lemonade and Aquafina Flavorsplash. Trademark Tropicana non-carbonated beverages grew in the low double-digits, led by the Tropicana fruit drinks line and reflecting volume trends on Tropicana Pure Premium that, while down slightly, showed sequential improvement from the first half of the year.

Carbonated soft drink (CSD) volumes were unchanged from prior year. Pepsi and Mountain Dew experienced low single-digit declines, offset by mid single-digit growth in trademark Sierra Mist. Across the trademarks, diet CSDs experienced mid single-digit growth, boosted by the relaunch of Diet Wild Cherry Pepsi, Pepsi One with Splenda, Diet Mountain Dew and Sierra Mist Free. Regular CSDs posted a low single-digit decline.

PepsiCo International (PI) profits grew 28% on broad-based gains in both snacks and beverages, with beverage volume recording an increase of 13%. Broad-based growth was led by double-digit growth in the Middle East, China, Russia, Venezuela and Argentina. Both carbonated soft drinks and non-carbonated beverages grew at double-digit rates.

Looking forward, the company updated its full-year earnings outlook, stating it now expects earnings per share for 2005 of US$2.64 to US$2.65 excluding special items, a rise from its previously forecast EPS of between US$2.56 and US$2.59.