PepsiCo plans to continue global expansion

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Fourth-quarter profits at PepsiCo almost doubled on the strength in its snacks business and beverage operations outside the Americas. The company said this week it would keep expanding internationally to offset the slump in the American drinks market.

PepsiCo said that it expected more savings from buying two of its bottlers, the Pepsi Bottling Group and PepsiAmericas, a deal it said would help get new products to market faster because it would control their distribution. The deal, valued at $7.8 billion, should close this month.

PepsiCo said it would introduce more snack products and speed growth in developing markets, which it expected to help increase revenue and profit. International sales are becoming increasingly important for American beverage makers, as people shift toward more healthful juices and teas or reduce purchases to save money.

Rival Coca-Cola is also expanding overseas and has an advantage because more than 75% of its sales are abroad. PepsiCo's international sales are about half its revenue. That figure is up from 25% a decade ago and will keep growing, said chief financial officer Richard Goodman.

PepsiCo is building 14 plants in China to keep up with rising demand.

Sales for the period that ended December 26 rose 4.5% to $13.3 billion, just exceeding analysts' forecasts.

Pepsi's North American beverage revenue dipped slightly, to $2.75 billion, and volume fell 5%. The company said it was encouraged by the performance of its SoBe Lifewater and Gatorade beverages, which gained marketshare in the quarter.

Frito-Lay North America snacks sales rose 6%. Analysts say snack sales have held up better as people buy more food at grocery stores and eat out less in the recession.

Snack sales volume dropped in Europe, but volume in other parts of the world, including Asia and the Middle East, grew 13 percent.

Beverages outside of Europe and North America rose 8% in the quarter.

PepsiCo expects 2010 earnings to rise 11 to 13% on a constant currency basis.

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