PepsiCo Inc

cut its earnings growth targets for 2011 and beyond on Thursday, citing soaring commodity costs and uncertainty about when the economic recovery on paper will actually be felt by consumers.

Chief Executive Indra Nooyi, whom analysts peppered with tough questions on a tense conference call, defended the new forecast, which calls for earnings growth of 7 percent to 8 percent for 2011 and high-single digit rates beyond. She challenged analysts to find another $63 billion company that can grow as much despite weak demand and a huge exposure to commodities.

Boy, if you could find other companies like ours, you should go ahead and invest in them, Nooyi said.

Shares of PepsiCo, whose products range from Pepsi-Cola and Tropicana juice to Frito-Lay snacks and Quaker oatmeal, were down 2.1 percent in afternoon trading despite Pepsi reporting better-than-expected results for the fourth quarter.

The shares had lost about 4 percent from early October through Tuesday afternoon -- their last session before rival Coca-Cola Co surprised the market with sales volume increases in all of its segments.

Both companies said they would raise prices this year on some drinks as they try to offset higher costs for everything from corn syrup to packaging.

But PepsiCo's sizable food business makes it much more exposed to commodities than Coke and it said it would not fully offset the impact of the cost inflation with price increases, for fear of turning consumers away.

While there are signs of an economic recovery, company executives said unemployment remains high and consumers are holding on to their money.

FOURTH QUARTER BEATS ESTIMATES

PepsiCo's net income fell to $1.37 billion, or 85 cents per share in the fourth quarter, from $1.43 billion, or 90 cents per share, a year earlier.

Excluding items, earnings were $1.05 per share, topping analysts' average estimate of $1.04 per share, according to Thomson Reuters I/B/E/S.

Its sales jumped 37 percent to $18.16 billion, helped by the acquisition last year of its two largest bottlers. Analysts were expecting revenue of $17.6 billion.

Overall fourth-quarter volume rose 3 percent in snacks and 12 percent in beverages.

Excluding added volume the company took on as part of its bottler acquisition, North American volume rose 1 percent, trailing the 3 percent growth seen by Coca-Cola, which gained market share.

James Tierney, chief investment officer of WP Stewart and a PepsiCo shareholder, said Pepsi was doing pretty good in a tough sector.

PepsiCo is one of the best houses in a really tough neighborhood right now, Tierney said.

The company had earlier forecast earnings growth in the low double-digit range for 2011 and 2012, but lowered it, in part, because of commodity inflation of 8 percent to 9.5 percent this year, which translates to some $1.4 billion to $1.6 billion.

PepsiCo shares were down 2.1 percent, or $1.38, at $63.03 in afternoon trading on the New York Stock Exchange.

(Reporting by Martinne Geller, editing by Dave Zimmerman and Maureen Bavdek)

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