• by Karlene Lukovitz  @KLmarketdaily, October 8, 2009

Food sales gains overseas and continuing reductions in operating costs helped push PepsiCo Inc.'s net income up 9% to $1.7 billion ($1.09 EPS) in its third fiscal quarter, despite continuing U.S. beverage declines accentuated by consumer cutbacks on bottled water and sodas.

The PepsiCo International division, comprising the Africa/Middle East/Asian and European regions, gained 2.5% in net revenue and 20% in operating profit -- or 13% and 31%, respectively -- on a constant currency basis. Sales volume rose 2% (including a 9% gain in snacks/ beverages) on a CC basis.

PepsiCo Americas Foods had flat net revenue and a 1% operating profit gain, but gains of 7% and 6%, respectively, on a constant currency basis. Also on a currency-adjusted basis, Frito-Lay North America grew sales volume 3% and both net revenue and operating profit by 5%. Quaker Foods N.A. volume and net revenue rose 8%, while operating profit declined 1%. Latin American Foods' volume dipped 3%, but revenue and profit grew 9% and 11%, respectively.

PepsiCo Americas Beverages (PAB) saw sales decline 6% and net revenue and operating profit decline 7% and 5%, respectively, on a currency-adjusted basis. (Net revenue and profit were down 10% and 11%, respectively, on a reported basis.) PepsiCo attributed the declines to the "continued softness in the overall liquid refreshment beverage category" in North America.

However, PAB gained the number one volume and value share positions in carbonated beverages in measured channels during the period, and enhanced waters gained share as a result of a double-digit sales increase for SoBe LifeWater, according to PepsiCo.

Volume for energy drinks as a whole was also up by double digits, but the Gatorade brand -- which has recently revived its partnership with Michael Jordan and launched a new "What's G?" campaign featuring 16 top athletes -- continued to see sales declines. Management said that this overall brand performance reflected expected "modest improvement" versus the first half of the year. The company also reported that the new, lower-calorie G2 line continues to do well, with the highest repeat purchase rate of any new liquid refreshment beverage product in the past two years.

The company reaffirmed its full-year 2009 guidance of mid- to-high-single-digit growth in core, constant currency EPS over its core 2008 EPS of $3.68.