PepsiCo today (13 February) reported a slump in fourth-quarter earnings, hurt by restructuring and impairment charges – but the company said underlying profits rose 6%.
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The US-based snacks and beverage giant posted reported net income of US$719m for the three months to 27 December, down from $1.26bn a year earlier.
In October, PepsiCo announced plans to cut around 3,300 jobs and close around six plants to streamline the business and speed up decision-making.
The programme, dubbed Productivity for Growth, cost PepsiCo $543m during the fourth quarter, charges that dragged down the company’s reported net income.
Underlying net income, however, rose 6% during the three-month period, driven by higher profits from its foods business in Latin America and operations in the Middle East, Asia and Africa.
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By GlobalDataGroup operating profit fell during the quarter from $1.73bn to $1.21bn, although stripping out the restructuring and impairment charges, as well as commodity mark-to-market losses, core operating profit was up 9%.
Fourth-quarter net revenue rose 3% to $12.73bn as the impact of foreign exchange weighed on the results.
Looking at 2008 as a whole, PepsiCo reported net income of $5.14bn, down 9% on the year. Stripping out one-off items and losses from commodity hedging, core net income was up 5%.
Operating profit dipped 3% to $6.94bn, although PepsiCo said core operating profit rose 8% on 2007.
Net revenue, meanwhile, rose 10% to $43.3bn, with worldwide beverage and snacks volumes both up 3%. PepsiCo’s full-year core EPS was up 9% to $3.68.
Chairman and CEO Indra Nooyi said: “PepsiCo’s operating agility and disciplined execution delivered solid results in an extremely difficult year. We expect 2009 will present a challenging environment. However, I am confident that we have robust plans and an experienced team in place to navigate capably through the turbulent environment.”
The company said it expects the first half of 2009 – and the first quarter in particular – to present the most difficult year-over-year comparisons, in part reflecting commodity costs and foreign exchange rates.
It forecast “mid- to high-single-digit growth” at constance exchange rates for both net revenue and core EPS in 2009.
