PepsiCo Inc. (PEP), the No. 2 soft-drink maker, Thursday reported an 8 percent rise in fourth-quarter profit on volume growth, higher prices and a favorable foreign exchange rate.

Earnings rose to $985 million, or 58 cents a share, from $914 million, or 52 cents a share, a year earlier, meeting the analysts' average forecast compiled by Reuters Estimates.

PepsiCo said the results included gains of 5 cents a share from settling various tax matters and pretax costs of 6 cents a share for consolidating the manufacturing network at its Frito-Lay North America (search) snack-food unit.

Revenue rose 9 percent to $8.8 billion, compared with analysts' expectations of $8.6 billion. PepsiCo said this reflected broad-based volume increases and favorable foreign exchange.

The weak U.S. dollar, which increases the value of foreign sales, contributed almost 2 percentage points of the revenue growth, the company said.

PepsiCo said it expects 2005 profit of at least $2.55 a share, excluding the effect of the 53rd week, or $2.59 with that impact. Wall Street was expecting $2.56.

The outlook does not include any undistributed international earnings PepsiCo repatriates under the American Jobs Creation Act (search). The company said it has not decided whether to repatriate such money, which it believes would be $7.5 billion at most.

Total volume of products sold worldwide rose 6 percent during the quarter for the company, which is chasing the world's largest soft-drink maker, Coca-Cola Co (KO).

"This is a portfolio of business that continued to perform well and in line with expectations, and I think you can expect more of that," said Legg Mason analyst Mark Swartzberg.

At the company's largest division, Frito-Lay North America, volume rose 3 percent and revenue, 6 percent. PepsiCo attributed the increases to strength in the unit's major brands, with volume gains in the mid-single-digit percentage range for Lay's, Cheetos and Tostitos and in the low single digits for Doritos.

Operating profit at Frito-Lay rose 6 percent, with operating margin hurt by higher cooking oil and energy costs.

Volume at PepsiCo's North American beverages unit rose 2 percent, and revenue climbed 8 percent, led by growth in noncarbonated drinks like Gatorade and Tropicana juices.

At the Quaker Foods (search) unit, volume was up 7 percent, and revenue increased 9 percent, driven by demand for oatmeal products.

Volume at PepsiCo International rose 13 percent, with snacks up 6 percent and beverages increasing 12 percent.

"We believe the quality of Pepsi's results reflect a high degree of reinvestment, particularly in the International business," said J.P. Morgan analyst John Faucher. "This supports the sustainability and visibility of Pepsi's earnings stream."

Faucher reiterated his "overweight" rating on the stock.

PepsiCo said it intends to reduce its 42 percent stake in Pepsi Bottling Group to 35 percent, the level it held at the time of the bottler's initial public offering.

PepsiCo aims to sell up to 7.5 million shares during 2005 beginning this month. Pepsi Bottling had 257 million shares outstanding in the fourth quarter.

Shares of PepsiCo nosed up 48 cents, or less than 1 percent, to $54.62 in morning New York Stock Exchange trade. Pepsi Bottling fell 13 cents to $27.38.