NEW YORK, July 17 (Xinhua) -- PepsiCo reported stronger-than-expected earnings and revenue for the second fiscal quarter Thursday, while signaling confidence in its full-year outlook as recent strategic shifts begin to take hold.

Despite ongoing challenges in North America, the company expects a gradual recovery in demand, driven by product innovation, pricing strategy and international momentum, according to the report.

Its net income fell to 1.26 billion U.S. dollars in the second fiscal quarter ending June 14, from 3.08 billion dollars a year earlier, according to the company release. Meanwhile, its core earnings per share, excluding one-time items, dropped to 2.12 dollars from 3.59 dollars but still exceeded the analysts' forecast of 2.03 dollars.

PepsiCo's quarterly revenues rose 1 percent year over year to 22.73 billion dollars, reversing a 1.8 percent decline in the first quarter and beating expectations for 22.27 billion dollars.

"We're encouraged by the acceleration in our net revenue growth versus the previous quarter with our businesses effectively navigating through a challenging environment," said PepsiCo CEO Ramon Laguarta.

The company reaffirmed its full-year guidance, projecting flat core earnings at constant currency and low-single-digit organic revenue growth. PepsiCo now expects core earnings per share to decline 1.5 percent for the full year, an improvement from its prior forecast of a 3 percent drop, which is largely due to reduced currency headwinds.

To adapt to evolving consumer preferences and rising price sensitivity, PepsiCo is expanding its portfolio with healthier and more affordable offerings, recalibrating after years of price increases aimed at protecting margins, the company reported. Investors responded positively after the earnings report, as PepsiCo shares climbed over 6 percent Thursday.