PepsiCo Inc. (PEP), the world's No. 2 soft drink company, on Thursday said quarterly profit rose due to tax benefits and strong performances from its key Frito-Lay snack and North American beverage businesses and raised its full-year profit forecast.

The company also said it was closing four plants at Frito-Lay (search), resulting in 780 job cuts at those locations. About 250 of those jobs will be moved to other Frito-Lay operations.

As a result of the job cuts and $221 million in tax benefits, PepsiCo forecast full year earnings per share of at least $2.35, 6 cents above its previous estimate. It affirmed its 2004 forecast of cash from operating activities of about $4.9 billion.

"The company posted high-quality, robust growth in what has proven to be a difficulty retail environment in the Unites States," said Credit Suisse First Boston's Andrew Conway, who reiterated his "outperform" rating on the shares. "The international beverage and snack profit story continues to excel."

PepsiCo shares rose 3 percent to $49.53 on the New York Stock Exchange (search). Shares of rival Coca-Cola Co. (KO) were up 32 cents at $40.33. Coca-Cola in mid-September said its profit would lag Wall Street forecasts and that there was no quick fix for its problems.

PepsiCo reported earnings of $1.36 billion, or 79 cents a share, including tax benefits of 13 cents a share, for the third quarter ended Sept. 4. This compares to year-earlier profit of $1.01 billion, or 58 cents per share.

Excluding the tax benefits, the company reported earnings of $1.14 billion, or 66 cents per share.

Analysts were expecting the Purchase, New York, company to earn between 64 cents and 66 cents a share, with an average forecast of 65 cents, according to Reuters Estimates.

Revenue rose 6 percent, to $7.26 billion from $6.83 billion.

Total volume of products sold worldwide rose 4 percent during the quarter, led by growth in the company's international operations.

Volume at Frito-Lay, the company's largest division, rose 2 percent but the unit's operating profit grew 7 percent as a strong performance by its salty snacks overcame higher cooking oil and energy costs.

"Strong price realization and productivity more than offset the same costs issues (mainly corn oil and energy) that Frito has been dealing with over the past two years," JP Morgan analyst John Faucher said in a research note. "We expect these cost pressure to abate somewhat over the next few quarters."

Faucher, who rates PepsiCo "overweight," said the stock remains his favorite pick in the beverage group.

Beverage volume fell 1 percent in the company's key North American territories during the quarter, hurt by the shift of Labor Day to the fourth quarter this year. But strong sales of noncarbonated beverages such as Gatorade and Tropicana juice drinks helped fuel an 8 percent rise in operating profit at the company's North American beverage unit.

The Frito-Lay job cuts stem from the company's plan to increase capacity at its plants by 10 percent. Manufacturing improvements allow the company to shut down the four factories, which are located in Allen Park, Mich., Council Bluffs, Iowa, Beaverton, Ore., and Visalia, Calif., the company said.

The company said it will take a charge of $160 million from the job cuts.

Frito-Lay will still have about 45,000 U.S. employees after the moves. PepsiCo employed 143,000 worldwide as of the end of 2003.