PepsiCo shares drop despite jump in profit

Snack and beverage maker PepsiCo Inc. said Thursday that its fourth-quarter profit climbed 61%, led by strong performances from its international and Frito-Lay divisions.

But its shares fell 1.8% as analysts were concerned about higher costs for raw materials such as orange juice, corn, cooking oil and sugar and about recent sales declines for its Gatorade and Tropicana products.

Profit for the three months ended Dec. 30 grew to $1.78 billion, or $1.06 a share, from $1.1 billion, or 65 cents, a year ago. Revenue edged up 3% to $10.38 billion.

Excluding one-time charges from taxes and restructuring, the company reported per-share earnings of 72 cents, meeting the expectations of analysts polled by Thomson Financial.

The company also raised its forecast for 2007 earnings per share by 2 cents to $3.30 and said it would buy back shares worth $3.3 billion. Analysts expect net income of $3.31 for 2007.

“This result was broadly positive,” Banc of America Securities analyst Bryan Spillane said.

In addition to Frito-Lay and Pepsi brand beverages, PepsiCo owns the Gatorade sports drinks, Tropicana juices and Quaker foods businesses.

Its shares fell $1.19 to $63.31.

“Our international business performed particularly well, delivering double-digit revenue and operating profit growth,” Chief Executive Indra Nooyi said in a statement.

“And Frito-Lay North America delivered robust sales and profit results.”

Sales at Frito-Lay increased 7%, led by sales of snacks such as Doritos, Sunchips, Tostitos, Lay’s and Cheetos. Operating profit was up 8% as volume grew 3%.

For the full year, PepsiCo said profit rose 38% to $5.64 billion, or $3.34 a share, up from $4.08 billion, or $2.39, in 2005. Revenue in 2006 rose 7.9% to $35.14 billion from $32.56 billion.