Profit Increases at Coca-Cola, PepsiCo Match Forecasts

Coca-Cola Co., the world’s largest soft drink maker, said Thursday that its profit increased 4.4% in the second quarter, matching expectations, as recent investments in Asia helped lift sales even as the region’s economies struggle.

PepsiCo Inc., meanwhile, reported a 19% jump in earnings, carried by sales in its higher-margin snacks as the No. 2 soda maker retools its lagging beverage business.

The maker of Pepsi-Cola and Lay’s chips earned $494 million, or 33 cents a diluted share, in the second quarter, up from $414 million, or 26 cents, a year ago, matching analyst forecasts. Revenue rose 3.4% to $5.26 billion.

Coke posted net income of $1.16 billion, or 47 cents a diluted share, up from $1.11 billion, or 45 cents, a year earlier, as revenue edged up 1.5% to $5.15 billion.

New drinks in the U.S. and World Cup promotions in Latin America boosted Coke’s results. Case sales grew 8% in North America and 10% internationally.

Pepsi’s sales rose 7% in North America and 8% internationally.

Global snack food sales grew 9% at Pepsi, while domestic operating profit from the Frito-Lay division rose 13%.

“Frito-Lay is the key,” said PaineWebber analyst Emanuel Goldman, who has a “buy” rating on Pepsi shares.

Coca-Cola Chief Executive Douglas Ivester has been blitzing Asia with new coolers and vending machines, and switching to more affordable packaging like returnable bottles in an attempt to keep sales rising as some of those countries slide into recession.

“They’re not shying away from spending even at a time when there’s problems, like in Asia, which you like to see,” said Credit Suisse First Boston analyst Martin Romm, who rates the stock “buy.”

Coca-Cola shares fell 63 cents to close at $87.19 on the New York Stock Exchange. Pepsi fell 19 cents to close at $37.94, also on the NYSE.

At a Glance

Other earnings, excluding one-time gains and charges unless noted:

AEROSPACE

TRW Inc.’s profit fell a greater-than-expected 6.4% in the second quarter to $125.8 million, or $1 a diluted share, on a 6.2% rise in revenue to $3.03 billion. The aerospace company, which also is the nation’s largest maker of auto air bags, said strikes at General Motors, a lawsuit settlement and shrinking auto parts margins offset growth at its aerospace and technology unit. The results missed the average analyst estimate by 8 cents.

AIRLINES

* Delta Air Lines Inc.’s fiscal fourth-quarter earnings rose 20% to $362 million, or $4.52 a diluted share, beating analyst forecasts of $4.34, as the carrier benefited from low fuel prices and filled a record percentage of seats. Revenue rose 6.2% to $3.76 billion.

AUTO PARTS

* Cummins Engine Co., maker of high-power diesel engines, said second-quarter earnings were flat at $53 million, or $1.38 a share, as interest costs from an acquisition offset a 17% increase in sales to $1.64 billion. The performance topped analyst estimates of $1.35.

* Goodyear Tire & Rubber Co. said second-quarter operating profit climbed 68% to $194.1 million, or $1.24 a diluted share, beating forecasts by a penny. Lower raw material and operating costs offset a 5.4% decline in revenue to $3.14 billion. The tire maker said sales were hurt by the strikes at General Motors, weak economies in Asia and Latin America and the strong dollar.

* B.F. Goodrich Co.’s profit jumped 39% to $55.9 million, or 74 cents a diluted share, in the second quarter, beating the 72-cent average estimate by analysts. Sales rose 19% to $1.01 billion. The company also announced it’s firing 150 workers as it reorganizes its specialty chemicals division to cut costs and integrate its latest acquisition.

* PPG Industries Inc., maker of auto and industrial paints, said its second-quarter profit fell 4.6% to $208 million, or $1.16 a diluted share, because of the strike at General Motors, a major customer. The results fell short of the $1.22 forecast by analysts. Revenue was up 3.1% to $2 billion.

BANKS AND THRIFTS

* BankBoston Corp. said second-quarter earnings rose 14% to $241.9 million, or 80 cents a diluted share, beating forecasts of 79 cents. Non-interest income rose 21%, as fees for financial services rose 23%, offsetting a loss from trading.

* KeyCorp said its second-quarter earnings rose 12% to $249 million, or 56 cents a diluted share, beating analyst estimates by a penny, as fees gained in investment banking, capital markets and trusts. Non-interest income rose 32% and net interest income fell 2.6%.

* PNC Bank Corp.’s profit rose 8.2% in the second quarter to $280.4 million, or 90 cents a share, exceeding estimates of 89 cents. Non-interest income rose 38% and net interest income rose 2.6%.

MEDIA

* McGraw-Hill Cos.’ second-quarter earnings rose 19% to $77.8 million, or 78 cents a diluted share, beating estimates. Analysts had expected 72 cents. Revenue increased 5.3% from improvement at its Standard & Poor’s ratings unit, led by strong new issue volume in the U.S. bond market and growth overseas. And its BusinessWeek magazine turned in the best revenue and profit for any second quarter in a decade on higher ad revenue.

* New York Times Co. reported a 17% increase in second-quarter net income to $78.2 million, or 40 cents a diluted share, as higher advertising revenue helped offset increased newsprint costs and a mixed circulation performance at its top newspapers. Revenue edged up 3.8% to $749.2 million. Profit was up 8.4% at the newspaper group, 30% in the magazine operations and 14.3% in the television operations. Advertising revenue rose 10% at the New York Times.

* Tribune Co.’s second-quarter earnings rose 13% to $105 million, or 75 cents a diluted share, beating the average analyst estimate by a penny. The publisher of the Chicago Tribune, which also owns the Chicago Cubs baseball team, said revenue rose 9.1% to $785.6 million.

PAPER AND WOOD PRODUCTS

* Bowater Inc. said second-quarter earnings quadrupled to $28.5 million, or 68 cents a share, from a year ago, far exceeding expectations of 61 cents, on lower costs and higher prices for its newsprint and for coated paper used in magazines. Revenue rose 11% to $395.8 million.

* Georgia-Pacific Group, the manufacturing operations of Georgia-Pacific Corp., posted operating profit of $30 million, or 33 cents a share, in the second quarter, compared with a loss of $10 million, or 11 cents, a year ago. The results far exceeded the 19-cent average analyst estimate. Revenue fell less than 1% to $3.28 billion.

* Union Camp Corp.’s profit jumped 77% to $18.8 million, or 27 cents a share, from $10.6 million, beating estimates of 21 cents, as revenue rose 3% to $1.13 billion.

OTHER INDUSTRIES

* Archer-Daniels-Midland Co. said fiscal fourth-quarter earnings plunged 49% to $62.7 million, or 11 cents a share, well below the average analyst estimate of 21 cents, but it provided no explanation for the decline. Analysts said ADM has been hurt by falling prices for lysine and processed soybeans, two key businesses. The company didn’t provide revenue figures.

* Capital One Financial Corp.’s net income rose a bigger-than-expected 70% to $66.9 million, or 96 cents a diluted share, in the second quarter, as the company continued its strategy of offering credit cards that meet an individual’s specific requirements. The results beat analyst forecasts by 2 cents. The issuer of Visa and MasterCard credit cards said revenue jumped 40% to $653 million.

* Gillette Co.’s second-quarter earnings rose 11% to $372 million, or 33 cents a share, meeting analyst estimates, as higher profit from its Braun appliances and Duracell batteries offset lower-than-expected sales of Sensor razors. Revenue fell 1.7% to $2.33 billion. Gillette said retailers ordered fewer Sensor razors than expected in anticipation of the introduction of its Mach3 razor. The Mach3 captured 35% of dollars spent for razors in its first two weeks of sales and was selling at twice the rate of other shaving systems, the company said. Gillette, which invested $750 million to develop the new razor, began shipping it to retailers July 1.

* Honeywell Inc., maker of thermostats, automated controls and aircraft guidance systems, said second-quarter earnings rose 28% to $125.8 million, or 98 cents a diluted share, from a year ago, besting analyst estimates of 93 cents. Sales rose 2.9% to $2.04 billion with strength in its space and aviation business although orders were flat.

* Office Depot Inc.’s earnings jumped 28% to $45.7 million, or 27 cents a diluted share, matching analyst estimates, as revenue rose 11% to $1.70 billion. Sales at stores open at least a year rose 7%.

* Owens Corning’s second-quarter earnings fell 6.3%, a better showing than expected, to $59 million, or $1.02 a diluted share, as the maker of building and glass fiber materials benefited from recent acquisitions of vinyl siding and window businesses. Analysts expected 91 cents a share. Sales jumped 26% to $1.29 billion.

* Polaroid Corp.’s second-quarter profit plunged to $1.34 million, or 3 cents a diluted share, from $34.6 million, or 76 cents, as a result of its strategy of reducing retailer inventories. The results missed expectations of 5 cents by analysts, who had forecast 75 cents before the company last month warned of lower earnings. Revenue dropped 18% to $464.7 million. Polaroid said its senior executives will spend more than $2.5 million to buy company stock at current prices.

* Tellabs Inc.’s second-quarter earnings surged 47% to $70.5 million, or 46 cents a diluted share, beating the average estimate of 42 cents, amid strong demand for its equipment that directs traffic on phone networks. Sales jumped 33% to $387.7 million.

* Unisys Corp.’s second-quarter net income more than doubled to $90.1 million, or 24 cents a diluted share, from $41.9 million, surpassing analyst forecasts of 21 cents, partly due to cost-cutting. Sales gained 9% to $1.73 billion, paced by a 29% sales jump in its information services business.