Food and beverage maker PepsiCo, Inc. (PEP) on Thursday said it will cut about 8,700 jobs, or nearly 3 percent of its global workforce, under a cost-savings program that is expected to generate $1.5 billion of incremental cost savings by 2014. Separately, the company reported a 4 percent increase in profit for the fourth quarter on double-digit growth in revenue. Both earnings per share and revenue beat analysts' estimates.
The company plans to increase advertising spend for its brands in 2012 by up to $600 million, with particular focus on North America, as part of efforts to regain market share from rival Coca-Cola Co. (KO). In addition, the company announced a 4 percent increase in its annual dividend and a share repurchase program of at least $3 billion.
The maker of Quaker, Tropicana, Gatorade, Frito-Lay, and Pepsi Cola brands said its fourth-quarter net income attributable to the company rose to $1.42 billion or $0.89 per share from $1.37 billion or $0.85 per share in the same period last year.
Core net income, which excludes special items, rose 8 percent to $1.82 billion from $1.69 billion in the year-ago period.
Core earnings per share rose 9 percent to $1.15 from $1.05 in the prior-year quarter. On average, 14 analysts polled by Thomson Reuters expected the company to earn $1.13 per share. Analysts' estimates typically exclude special items.
Net revenue grew 11 percent to $20.16 billion from $18.16 billion in the same period last year and beat analysts' consensus estimate of $19.91 billion.
In the quarter, snacks volume grew 8 percent and beverage volume increased 3 percent.
Segment-wise, PepsiCo Americas Foods' net revenue increased 10 percent, and PepsiCo Americas Beverages revenues edged up slightly, reflecting the refranchising of the beverage business in Mexico.
In Europe, revenues surged 32 percent on double-digit volume gains in both snacks and beverages, including the WBD acquisition. Asia, Middle East & Africa region posted a 16 percent increase in revenues, driven by favorable pricing and volume growth due to strong performance in key emerging markets.
For fiscal year 2011, PepsiCo's net income rose to $6.44 billion or $4.03 per share from $6.32 billion or $3.91 per share in the prior year. Core net income increased to $7.04 billion or $4.40 per share from $6.68 billion or $4.13 per share in the previous year.
Net revenue for the year grew 15 percent to $66.50 billion from $57.84 billion last year.
Analysts expected the company to earn $4.39 per share on revenues of $66.32 billion.
Looking ahead, PepsiCo forecasts high-single-digit core constant currency earnings per share growth for 2013 and beyond after a transition year in 2012, in which it expects core constant currency earnings per share to decrease 5 percent from core earnings per share of $4.40 in 2011.
The company targets mid-single-digit core constant currency net revenue growth in 2012, in-line with its long-term target.
PepsiCo also said it plans to increase returns to shareholders in 2012 through a 4 percent increase in its annual dividend to $2.15 per share, beginning with the June 2012 dividend payment and a share repurchase program this year of at least $3 billion.
PEP closed Wednesday's trading at $66.74, down $0.02 on a volume of 6.02 million shares. In Thursday's pre-market, the stock is down $1.79 or 2.68 percent to $64.95.
For comments and feedback: editorial@rttnews.com