Earnings: Marriott | PepsiCo

Marriott Says Profit Rises 35 Percent

WASHINGTON -- (AP) -- Hotel operator Marriott International Inc. (MAR) said Thursday its second-quarter profit climbed 35 percent on increased sales across all business segments.

Second-quarter earnings increased to $186 million, or 43 cents per share, compared with $138 million, or 29 cents per share, in the prior-year period.

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Adjusted net income for the quarter totaled $182 million, or 42 cents per share, which excludes results from the company's synthetic fuel business. The company owns four synthetic fuel plants but suspended production at them in April due to high oil prices and uncertainty about tax credits.

Quarterly revenue rose 7.1 percent to $2.85 billion from $2.66 billion in the year-ago period.

Analysts polled by Thomson Financial were expecting second quarter earnings of 40 cents per share on revenue of $2.81 billion.

All per share amounts are adjusted for Marriott's 2-for-1 stock split completed on June 9.

The company's revenue per available room, a key industry gauge also known as RevPAR, grew 10.4 percent for comparable properties.

Marriott forecast third-quarter earnings in a range of 28 cents per share to 30 cents per share, excluding synthetic fuel unit results. The company sees full-year earnings in a range between $1.52 per share and $1.57 per share, also excluding synthetic fuel.

Analysts are looking for third-quarter earnings of 30 cents per share and full-year earnings of $1.54 per share.

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PepsiCo Profit Rises 14 Percent

NEW YORK (Reuters) - PepsiCo Inc. (PEP) Thursday said quarterly profit rose a better-than-expected 14 percent, boosted by noncarbonated beverages including Gatorade sports drinks and Aquafina water and strong growth in international markets such as Russia and China.

The world's No. 2 soft drink company also raised its full-year outlook based on the strong first-half earnings and revenue performance.

The stock was up more than 1 percent at $61.78 in premarket trade on the Inet electronic brokerage system.

PepsiCo, whose products also include Frito-Lay snacks and Quaker cereals, said second-quarter earnings rose to $1.36 billion, or 80 cents a share, from $1.19 billion, or 70 cents, a year earlier.

Wall Street, on average, had expected 77 cents a share, according to Reuters Estimates.

PepsiCo has increasingly relied on sales growth of its noncarbonated drinks, such as water and sports drinks, and its Frito-Lay snacks division to offset weakening demand for its namesake sodas.

The company said second-quarter revenue rose 12 percent to $8.6 billion from $7.7 billion a year earlier. Analysts' average estimate was $8.48 billion.

"Pepsi's results look strong across the board in terms of earnings and revenue beating estimates with international being a big component there," said Walter Todd, portfolio manager at Greenwood Capital Management, which owns 212,000 PepsiCo shares. "Soft drinks sales were expected to be weak and it was more than offset by their noncarbonated drinks."

While overall snacks volume rose 8 percent, beverage volume jumped 10 percent.

Looking ahead, PepsiCo lifted its forecast for 2006 earnings to at least $2.95 a share from a prior forecast of at least $2.93. The raised outlook was still a penny lower than Wall Street expectations of $2.96 a share, according to Reuters Estimates.

"The management team has been conservative on its guidance, and people may be questioning why they are not following through some of this upside to the year's forecast ... it makes you wonder what their outlook is for the second half of the year if they are not a little more confident," Todd said.

NONCARBONATED DRINKS, OVERSEAS HELP

The Pepsi Beverages North America unit saw 8 percent volume growth, helped by 23 percent volume growth in noncarbonated drinks -- including Gatorade, Aquafina, Lipton ready-to-drink teas, Tropicana juice drinks and Propel fitness water.

Volume sales of carbonated soft drinks declined 1 percent.

Soft drink companies have been trying to cater to consumers who have been moving from sugary soft drinks to diet versions, or to healthier low- or no-calorie beverages like water and orange juices with reduced sugar.

Sales volumes at Frito-Lay North America, the company's largest division, rose 4 percent during the quarter, driven by 20 percent growth in Sun Chips and also volume increases in the Lay's, Cheetos and Tostitos brands.

PepsiCo International, which includes all of PepsiCo's business outside the United States and Canada, posted 10 percent beverage volume growth led by gains in the Middle East, China, Argentina, Thailand and Russia. Snacks volume grew 11 percent boosted by double-digit growth in Russia, Turkey, Egypt, Australia and India.

So far in 2006, PepsiCo's stock has risen 3.4 percent and trades at 20.6 times expected 2006 earnings. Shares of No. 1 soft drink company Coca-Cola Co. (KO) have risen 8 percent, with a price-to-earnings ratio of 19.

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