PepsiCo shrugs off peso's slide to hit $6bn sales

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The Independent Online

PepsiCo put some fizz into its first-quarter results following a sparkling performance from its snack food and restaurant divisions.

The company's increased international diversification over the past decade helped to push all three divisions into double-digit profit growth, with total revenue up to $6.19bn for the quarter to 25 March.

This compares with $5.72bn for the same period in 1994. Earnings per share were 40 cents against 31 cents.

Wayne Calloway, PepsiCo's chairman and chief executive officer, said that the growth in profits was particularly impressive in the light of the recent devaluation of the peso in Mexico, which is PepsiCo's second- biggest market.

Mexicans love to snack and sales in the country account for more than half of PepsiCo's international snack food market.

Despite the 50 per cent devaluation in the peso, the division still made sales of $647.3m, only 2 per cent less than in 1994.

Worldwide sales of snack foods increased to $1.8bn while operating profit rose 12 per cent to $302.7m.

PepsiCo said that lower-margin package sizes and lower operating expenses accounted for the group's profits racing ahead of sales.

The restaurant division bounced back after a lean year in 1994 with worldwide sales growth of 9 per cent to $2.4bn in the quarter.

Operating profits increased 14 per cent to $142.3m.

Taco Bell's introduction of a new line in low-fat foods reduced its operating profit by 5 per cent to $31.9m, but revenue increased by 10 per cent to $741m.

KFC outlets performed well and showed an increase in sales of 9 per cent worldwide to $597.1m, helping profits to improve 31 per cent to £3.4m.

Extra outlets for Pizza Hut increased sales by an impressive 8 per cent to $1.1bn while operating profit rose by 17 per cent to $78m.

The beverage division made steady progress.

Worldwide sales increased 9 per cent to $2bn, with growth rising a healthy 19 per cent to $211m.

Sales in the United States also showed an increase of 8 per cent to $1.4bn, primarily because of volume growth and higher prices to retailers.