Business

Pepsi cuts earnings forecast on higher commodity prices

Cans of Pepsi Cola
Image caption Sales rose at PepsiCo in the fourth quarter of 2010 but its profits fell due to higher costs

Soft drinks maker PepsiCo has cut its earnings forecast for 2011, warning that higher commodity prices will push its costs up and citing a weak economy.

It is now targeting earnings per share growth of 7-8%, compared with a previous forecast of 10-11%.

The news came as PepsiCo reported a 5% fall in fourth-quarter net profit to $1.37bn (£850m) because of higher costs. Revenue rose 37% to $18.15bn.

For the whole of 2010, net profit rose 6% to $6.32bn on revenues of $57.84bn.

The company said it was mindful that consumer spending could be weak given high levels of unemployment in key developed markets. It is also concerned about high raw material costs, and "a potentially difficult competitive pricing environment, particularly in beverages".

PepsiCo's results come a day after rival Coca-Cola reported higher-than-expected quarterly sales, with growth seen in all of its major markets for the first time in at least five years.

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