This is a summary of the second quarter fiscal 2008 earnings call conducted by Pepsico Inc. (PEP) on July 23, 2008
Management:
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Chief Executive Officer and Chairman: John Compt
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Vice Chairman and CEO of PepsiCo International: Mike White
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Chief Financial Officer: Richard Goodman
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CEO of PepsiCo Americas Food: John Compton
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CEO of PepsiCo Americas Beverages: Massimo D\''Amore
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VP of IR: Jane Nielsen
Key Investors Issues:
- Net revenue was $10.9 billion, up 14% from the prior year same period revenue of $9.6 billion.
- Net income was $1.7 billion or $1.05 a share, up 9% from $1.56 billion in 2007.
- Pepsico spent $2.9 billion repurchasing its shares during the quarter.
Year-to-date Financial Highlights:
- Net revenue rose 20.9% to $19.3 billion from $15.96 billion in the prior year.
- Net income was $2.8 billion or $1.76 a share, up from $2.65 billion or $1.59 a share in 2007.
Second Quarter Highlights:
Net revenue was $10.9 billion, up 14% from the prior year same period revenue of $9.6 billion as the firm continues to drive growth across its worldwide snacks and beverage businesses primarily through strong product innovation, well-executed pricing actions and focus on expense control and productivity.
- Frito-Lay North America reported revenue of $2.95 billion compared to the $2.7 billion in 2007, while Quaker Foods North America reported $406,000 revenue as opposed to $390,000 in the prior year.
- Latin America Foods had revenue of $1.5 billion, up from $1.1 billion in 2007 and PepsiCo Americas Foods’ revenue was $4.9 billion compared to $4.2 billion in 2007.
- PepsiCo Americas Beverages’ revenue was $2.88 billion as opposed to $2.86 billion in the prior year.
- PepsiCo International reported revenue of $3.2 billion compared to $2.56 billion of the prior year quarter.
Total Operating profit was $2.185 million compared to $1.959 million last year quarter
- Division operating profit was $2.3 billion from $2.13 billion in 2007, despite a corporate loss of $102,000.
- Net income was $1.669 billion or $1.05 a share, up 9% from $1.56 billion in the prior year on revenue growth.
- Cash and cash equivalents were $1. 77 billion from $910,000 as accounts and notes receivable, net was $5.6 billion compared to $4.39 billion in 2007.
- Goodwill was $5,511 million compared to $5,169 million of last year prior quarter.
- Accounts payable and other current liabilities were $7.9 billion compared to $7.6 billion in the prior year.
Fiscal 2008 Outlook:
- The Company expects full-year 2008 performance of 3 to 5% volume growth, low-double-digit net revenue growth (including acquisitions and foreign exchange) and EPS of at least $3.72 excluding the impact of any mark- to-market gains/losses.
- Cash provided by operating activities is expected to be approximately $7.6 billion and capital spending about $2.7 billion.
The Company intends to repurchase at least $5.3 billion of its shares, subject to market conditions.
- The company will continue engaging with consumers in the UK with a Do Us a Flavor campaign, where consumers design and vote on a new Walkers crisps flavor.
- The company will be launching a new Tropicana Twister flavor, Apple, in India, expanding the Pepsi Deluxe lineup in the Philippines and continuing our rollout of Pepsi Max.
- Its top line will continue to diligently implement revenue management strategies with price pack architectures focused on driving rate, while maintaining affordability and minimizing volume impact.
Key questions and answers for the second quarter fiscal 2008 earnings call, conducted by Pepsico Inc. (PEP) on July 23, 2008
Bill Pecoriello:
What percent of input costs are hedged for 2009 and can you elaborate the types and the magnitude of the productivity savings that you might see for 2009?
Richard Goodman: There have been increases in grains and cooking oil and fuel, so we are taking the opportunity to decrease volatility by expanding the amount of coverage that we take and the duration of the coverage we take.
Bill Pecoriello:
Is it too early to comment on price into 2009, given the coverage and the productivity programs?
