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PepsiCo warns of weak world economy

PepsiCo Inc. warned the global economy appears to be weakening, singling out South America and Eastern Europe in particular, even as its first-quarter results topped Wall Street expectations.

The snack and beverage giant also reported Monday a $373 million impairment charge in its Chinese beverage joint venture amid weak consumer demand but reiterated full-year guidance for the company as a whole after productivity gains and lower commodity costs boosted operating margins.

"It's a difficult environment," Chairman and Chief Executive Indra Nooyi told analysts on an earnings call, adding globe-trotting businesses could face "sustained volatility and uncertainty."

Still, PepsiCo's beverage volume rose 3% from the year-earlier quarter, the fastest rate in three years, with nonsoda brands like Lipton tea and Gatorade sports drinks offsetting weak cola sales. Snack volumes rose 1.5%, including 9% growth for cheese-flavored Cheetos outside North America.

Net profit for the 12 weeks ended March 19 fell 24% to $931 million from $1.22 billion a year earlier. Revenue dropped 2.9% to $11.86 billion from $12.22 billion, with weaker foreign currencies and last year's deconsolidation of Venezuelan operations having...