By Allison Prang
PepsiCo Inc.'s sales climbed in its latest quarter amid the company's efforts to invest in areas such as advertising and manufacturing.
The food-and-beverage company said organic revenue growth, which strips out currency swings and acquisitions -- was up 4.3% in the period. The company is now guiding to either meet or beat its expectations for organic revenue growth of 4% for the year.
Net income fell to $2.1 billion in the third quarter, compared with $2.5 billion a year earlier. Earnings fell to $1.49 a share, from $1.75 a share. Adjusted earnings were $1.56 a share, beating FactSet's analyst consensus estimate by 6 cents a share.
PepsiCo's selling, general and administrative costs rose by more than 8%, canceling out much of its top-line gains. The company's income-tax provision almost tripled.
PepsiCo has been investing more in areas such as advertising and distribution. In an interview Thursday, Chief Financial Officer Hugh Johnston said that the company's advertising costs were up 12% year to date and that investment has spanned across its different brands. "We're seeing returns on the investment," Mr. Johnston said.
PepsiCo has also added new lines to the company's manufacturing plants, he said.
Though profit fell, net revenue climbed 4.3% to $17.19 billion, helped by the Frito-Lay North America unit as well as its markets abroad. Analysts were expecting revenue of $16.93 billion.
Net revenue at PepsiCo's North American beverage division rose year over year. PepsiCo earlier this year rolled out three different flavors of Pepsi that are made with real juice.
Shares of PepsiCo rose 2.1% in premarket trading.
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