Pep Brands

Source: PepsiCo.

PepsiCo (NYSE:PEP) reported third-quarter earnings before the bell today that showed strength in the company's snack business despite slowing sales from its beverage unit. For the quarter ended Sept. 7, Pepsi posted earnings of $1.23 per share on a GAAP basis, compared to EPS of $1.21 in the year-ago period. Net revenue inched up 1.5% to $16.9 billion in the quarter.

Organic sales growth at the company's Frito-Lay North America division helped offset soft sales in its beverage business. Specifically, revenue increased 5% in Pepsi's Americas Foods segment, driven by higher prices and increases in sales volume. This helped balance out a 1.5% revenue decline in Pepsi's Americas beverage business. Demand for the company's soda products sank in the mid-single digits in North America, whereas beverage volume in Latin America rose less than 1% in the quarter. In North America, non-carbonated beverage volume declined in the low single digits.

Coca-Cola reported stronger results for its North American unit a day earlier, with overall volume up 2%. Uncarbonated drinks rose 5% and soda volume was even from a year ago.

PepsiCo CEO Indra Nooyi stressed in a conference call with analysts that the broader $95 billion beverage industry remains a "pretty damn good business" in terms of generating cash for the company.

She also suggested that the company's fortunes could turn as people move away from sodas, given PepsiCo's leadership position in uncarbonated drinks. Gatorade, for example, leads Coca-Cola's Powerade in the sports drink category.

Overall, Pepsi's turnaround appears on track. The company plans to achieve productivity savings of $900 million this year, and $3 billion in productivity savings through 2014.

The company said it expects to return roughly $6.4 billion to shareholders through dividends and share repurchases in 2013, with about $3.4 billion of that in dividends.

-- Material from The Associated Press was used in this report.

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Fool contributor Tamara Rutter has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and PepsiCo. The Motley Fool owns shares of PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.