PepsiCo profit beats expectations on North American demand

PepsiCo reported a better-than-expected profit for the second quarter on Thursday, buoyed by lower raw material costs and higher demand for Frito-Lay snacks and new beverages in North America.

The maker of Pepsi, Gatorade and Quaker Oats also boosted its forecast for adjusted profit for the year.

Net income attributable to PepsiCo increased 1.3 percent to $2.01 billion, or $1.38 a share.

Excluding items, the company earned $1.35 per share, beating the average analyst estimate of $1.30, according to Thomson Reuters.

Net revenue fell 3.3 percent to $15.395 billion, but inched past the average analyst estimate of $15.37 billion.

Net revenue in the North America Beverages unit, PepsiCo's biggest business, rose 1 percent, the slowest growth since PepsiCo started breaking out beverage sales from the region a year ago.

Drinks such as Propel flavored water and Naked Cold Pressed juice, Smartfood Popcorn and 'Simply” brand snacks helped drive sales, the company said.

Quaker Foods North America operating profits rose to $146 million from $132 million, and revenues rose to $561 million from $546 million. The company operates a large cereal and pancake syrup manufacturing plant in downtown Cedar Rapids.

Revenue from the Frito-Lay business, which includes Doritos, Lay's and the Simply line of snacks, grew 3 percent.

PepsiCo's cost of sales fell 6 percent in the three months ended June 11.

The Purchase, N.Y.-based company said it expects 2016 adjusted earnings of $4.71 per share, up from its previous forecast of $4.66 per share.

PepsiCo and other consumer companies are spending more to develop new products to meet the changing tastes of consumers who are increasingly seeking healthier options.