Snack Competitor’s Demise Helps Boost PepsiCo Profit

PepsiCo said Tuesday that earnings rose 15% in the second quarter as new products and the demise of its main snack rival solidified Frito-Lay’s domination of that market.

Pepsi’s profit from operations rose to $560 million, or 34 cents a share, from $487 million, or 30 cents, a year ago. Revenue at Pepsi, which makes Pepsi-Cola and operates the KFC, Taco Bell and Pizza Hut restaurants, rose 6.2%, to $7.69 billion from $7.25 billion.

The company showed its strongest gain in its Frito-Lay U.S. snack business, as No. 2 Eagle Snacks went out of business and consumers snapped up Pepsi’s new line of low-fat chips. Unit sales at the operation rose a robust 11%, benefiting from years of cost cutting and heavy spending on technology and marketing.

Profit rose 13% at Frito-Lay, 14% at Pepsi’s U.S. beverage unit and 64% at its KFC restaurants.

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Lockheed Martin’s net income for the second quarter rose 10%, reflecting cost-control efforts and this year’s acquisition of Loral.

The world’s largest aerospace company said its net income for the quarter was $299 million, or $1.50 a share.

In the same quarter a year ago, a $326-million merger-related charge had led to a loss of $53 million, or 36 cents a share.

At a Glance:

RJR Nabisco Holdings reported a $27-million loss in the second quarter due to the previously disclosed costs of restructuring its Nabisco unit. But the company, whose brands include Winston and Camel cigarettes, Oreo cookies and Ritz crackers, said its earnings per common share rose 10% from a year ago, if one-time items in both years were excluded from the comparison. That was in line with what securities analysts had expected. RJR’s loss for the quarter amounted to 11 cents per share and contrasted with earnings a year earlier of $153 million, or 37 cents. Separately, Nabisco Holdings, which is 80%-owned by RJR Nabisco, said its second-quarter earnings rose 14% to $90 million, or 34 cents a share, from net income of $79 million, or 30 cents, in the year-earlier quarter. The results matched the average estimate of analysts. RJR’s earnings were incorrectly listed in Tuesday’s Business section.

American Home Products, Schering-Plough and SmithKline Beecham posted double-digit earnings growth for the second quarter on surging sales of their leading drugs and newer products. American Home said net income increased to $391.3 million, or 62 cents a share, from $299.6 million, or 49 cents, a year ago. Schering-Plough said net income rose to $317.1 million, or 86 cents a share, compared with profit from continuing operations of $276.1 million, or 74 cents, a year earlier. SmithKline Beecham said net income rose 13% to $349 million, or 63 cents a share, compared with $308 million, or 56 cents, in the year-earlier period.

UAL, parent of United Airlines and Shuttle by United, reported record quarterly earnings of $337 million, or $2.52 a share, from $215 million, or $1.63, in the year-ago period.

Burlington Northern Santa Fe’s second-quarter earnings rose 41% to $211 million, or $1.35 a share, short of analysts’ expectations. The company earned $150 million, or 98 cents a share, in the year-earlier period.

Pacific Enterprises reported earnings of $56 million, or 67 cents per share, for the second quarter, as compared with $45 million, or 51 cents, for the same period a year ago.

Avery Dennison said second-quarter net income rose 17% to $41.6 million, or 79 cents per share, compared with $35.7 million, or 67 cents, in the 1995 period.

Salomon reported surprisingly strong second-quarter profit of $291 million, or $2.58 a share, contrasted with a loss of $60 million, or 73 cents, in the same period a year ago, when the company had big commodity trading losses.

Allstate earned $764 million, or $1.71 a share, in the second quarter. That compared with earnings of $519 million, or $1.15, a year earlier.

Monsanto said second-quarter earnings rose 26% to $365 million, or 62 cents a share, from $290 million, or 51 cents, in the year-ago quarter.

Hershey Foods said its second-quarter earnings rose 23% to $40.8 million, or 53 cents per share, up from $33.3 million, or 38 cents, in the 1995 period.