Blog: Will PepsiCo move to calm shareholders tomorrow?
Michelle Russell | 8 February 2012
PepsiCo is set to publish its earnings results tomorrow (9 February), spanning a year in which the snacks and beverage giant has had its fair share of headlines.
Highs included the completion of its purchase of Russian dairy company Wimm-Bill-Dann and hitting the US$1bn mark with three more of its brands - Diet Mountain Dew, Brisk and Starbucks.
PepsiCo also bought a 5% share in Tingyi (Cayman Islands) Holding Corp, in exchange of its bottling operations in China. PepsiCo has the option to acquire 20% at a later date.
Analysts believe the move is a smart one for PepsiCo, given that bottling plants are a non-core asset for them.
However, widespread reports of unrest among PepsiCo investors have become hard to ignore in the last 12 months. A groundswell of PepsiCo investors appear to believe that their company has overstretched and, in doing so, has neglected its core business.
Reports in mid-November claimed that some members of PepsiCo's board want to take a closer look at splitting the snack and beverage units, a move that group CEO Indra Nooyi was thought to be against. Nooyi found a supporter in our managing editor Dean Best, who argued in late-November that the company's shareholders should focus more on the long-game than target short-term gains.
Whether this will indeed be the case will be revealed tomorrow, but Bernstein Research analysts believe that PepsiCo should address "at least three core issues head-on" when it presents its business outlook to investors.
The analysts note the need for "significant brand reinvestment", especially in North American beverages, the need for "accelerated cost-cutting", and the need to refocus its near-term portfolio strategy back on core beverages and snacks and away from "often-emphasised health & wellness objectives".
"Even though most investors with whom we speak seem supportive of a plan similar to that outlined above, many remain inherently skeptical of PEP management and their ability to deliver; much of this skepticism is rooted in a series of perceived (and, we believe, largely real) missteps over the past several years," the analysts said.
"While rebuilding trust will be a challenge for PEP, we remain cautiously optimistic based on recent developments; we hope that management delivers," the added.
While much of the speculation surrounding the company has died down since November, could PepsiCo be planning a big announcement to calm its shareholders this week?
Since Theresa May took over as UK Prime Minister in the wake of the country's referendum vote to quit the European Union, she and her ministers have been at pains not to divulge their negotiating posi...
Greenpeace's long-running campaign against UK tuna brand John West, owned by seafood giant Thai Union, is now directing its fire against Sainsbury's....
The Obama administration appears to have conceded the landmark Trans-Pacific Partnership (TPP) trade deal will not be pushed through in the lame-duck session of Congress before Donald Trump is inaugur...
- Unilever 2016 investor day - the top takeaways
- Have food promotions reached tipping point?
- Quorn CEO sets out stall for 2017 - interview
- How Tyson's new CEO plans to grow the meat group
- Mondelez goes beyond certified cocoa - analysis
- Nestle unveils process to cut sugar by 40%
- Putin 'wants embargo to run as long as possible'
- Unilever sets new margin target with help from ZBB
- Unilever focuses on "value" of spreads arm
- McCormick to buy flavours business Enrico Giotti