This summary is based on the fourth quarter fiscal 2008 earnings call conducted by PepsiCo Inc. (PEP) on February 13, 2009.
Management:
CEO: Indra Nooyi
CFO: Richard Goodman
CEO, PepsiCo Internation: Mike White
CEO, PepsiCo Americas Foods: John Compton
CEO, PepsiCo Americas Beverages: Massimo D’Amore
VP of IR: Mike Nathenson
Key Investor Issues:
- Full year revenue grew 10% to $43.3 billion.
- Full year reported EPS were $3.21 and core EPS firmed 9% to $3.68.
- The worldwide beverage and snacks volume both grew 3% for the year.
Fourth Quarter Financial Highlights:
International beverages were 10% higher from 2007 and international snacks gained 5.5%.
- The management also reported that full year cash flow was a robust $7 billion.
- The management returned more than $7 billion to shareholders in the form of dividends and share buybacks.
Frito-Lay North America was rock solid throughout the year.
- The excellent revenue management enabled them to sustain volume momentum while achieving 8% revenue growth and 7% profit growth.
- Quaker Foods responded positively to the flooding of the main Cedar Rapids plant and delivered 8% profit growth.
- Latin America foods had a good year with revenue and profit growth of more than 20%.
- The profit growth was a reflection of solid operating performance in key businesses in Mexico and strong growth in the developing countries of South America.
- Latin American beverages grew volume mid single-digits on the strength of diversified portfolio of carbonated soft drinks and non-carbs.
- PepsiCo international posted mid teens earnings growth due to the balance of solid performance in the developed markets and continued high growth in developing markets of Eastern Europe, the Mid East, China and India.
- The North American beverage business performed below managerial expectations.
The company is forecast to generate savings of $350 million to $400 million in 2009.
- The cumulative total will be $1.2 billion over a three-year period.
- The majority of these savings will be invested to drive growth in key businesses and to enhance long-term R&D capabilities.
PepsiCo Americas foods:
Frito-Lay North America is performing exceptionally well.
- With the price increases in November, all of the 2009 pricing is now in the market and the company is experiencing better than expected price elasticity.
- The salty snack category led by Frito-Lay is one of the fastest growing consumer packaged goods categories in the terms of dollar growth.
- In 2008, in measured channels Frito-Lay scanned revenue growth was almost 9%, three times faster than the average scanned growth in the total store.
The Latin American businesses had organic volume growth of 1%, revenues firmed 11% and profits advanced 20%.
- Gamesa is reportedly off to a strong start and South America continues to perform well.
- Third Quaker Foods is the company’s foundation for nutritious healthy products.
- The management is investing in new products like True Delight Bars.
PepsiCo International:
Walkers in the U.K and the developed European snacks portfolio in Spain, Portugal, France, Belgium and Holland had high single-digit revenue and profit growth with volumes off only modestly.
- The carbonated soft drink business in Europe also performed with low single-digit volume growth and margins consistent with previous trends.
- The management expressed pleasure with the performance of the carbonated soft drinks business in the U.K.
- The business recorded low double-digit volume growth and positive share gains on the strength of the Pepsi Max no sugar product line.
- Operational challenges were recorded in the Tropicana juice business in both the U.K and France.
The flagship Walkers business recorded positive results on the strength of a do us the flavor promotion with consumers designing the flavor of their choice.
