PepsiCo’s 4th-Quarter Earnings Plummet 85%

A huge loss in international beverages and slumping sales at the Pizza Hut and Taco Bell chains sent PepsiCo Inc.’s earnings down an unexpectedly steep 85% for the fourth quarter, the company reported Tuesday.

The slide overshadowed improvement in the Frito-Lay snack food and North American soft drink businesses and higher sales at the KFC restaurant chain.

The overall results were lower than Wall Street expected, and PepsiCo shares fell $1.25 to close at $32.875 on the New York Stock Exchange.

The diversified food and beverage company also said it had decided to sell some of its smaller restaurant businesses, including the Chevy’s, California Pizza Kitchen, East Side Mario’s and D’Angelo’s chains. No buyers have yet been found.

Those businesses are separate and much smaller than the fast-food restaurant operations that PepsiCo said last month would be spun off later this year to PepsiCo shareholders.

The spinoff will include the KFC, Pizza Hut and Taco Bell chains.

PepsiCo earned $28 million, or 3 cents a share, in the three months ended Dec. 28, compared with $181 million, or 11 cents, a year earlier. Revenue rose 4% to $9.53 billion from $9.21 billion in 1995.

Without onetime charges in its international beverage business and the restaurant business, PepsiCo would have earned 24 cents a share. But that was below the 32 cents expected by analysts.

At its snack foods division, operating profit rose 16% in North America on a 6% gain in unit sales. Overseas, Pepsi’s snack earnings rose 18% in the quarter, while unit sales grew 7%.

Restaurant costs rose as the company closed a higher-than-expected number of eateries.

Last week, rival Coca-Cola Co. reported an 18% rise in fourth-quarter net income, earning $762 million, or 31 cents a share, compared with $648 million, or 26 cents.