PepsiCo Weathers Current Macroeconomic Challenges

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PepsiCo Weathers Current Macroeconomic Challenges

PepsiCo Weathers Current Macroeconomic Challenges
February 12
14:53 2016

PepsiCo achieved organic revenue growth of 5% but reported net revenue decline of 5% to $63.056 billion for 2015 as foreign exchange translation had a 10 percentage-point unfavourable impact on reported net revenue. Reported operating profit declined 13% to $8.353 billion, reflecting unfavorable foreign exchange translation and exceptional charges. On a constant currency basis operating profit increased 6%.

The core operating margin expanded by 30 basis points, respectively. The operating margin improvement reflects the implementation of effective revenue management strategies and productivity initiatives, partially offset by impairment charges related to a dairy joint venture and a 40 basis point increase in advertising and marketing expense to 6.3 percent of sales.

Indra Nooyi, chairman and chief executive of PepsiCo.

Indra Nooyi, chairman and chief executive of PepsiCo.

“We are happy to report that we met or exceeded every financial goal we set for 2015, demonstrating consistent performance in the face of volatile macros,” says Indra Nooyi, chairman and chief executive of PepsiCo. “Our portfolio has been strategically designed to weather the current macroeconomic challenges. Our results reflect the balance of our brand portfolio, geographic footprint, consistent marketplace execution and a relentless focus on productivity.”

She elaborates: “While facing the challenges of a choppy macro environment, we continued to make thoughtful investments in our future. By making investments in our brands, product innovation and supply chain, we have fortified our business for sustained growth. Notably, we increased advertising and marketing expense as a percentage of sales by 40 basis points for the full year and 85 basis points in the fourth quarter.”

PepsiCo returned more than $9 billion to shareholders in the form of dividends and share repurchases in 2015, bringing its cumulative 10-year shareholder cash returns to more than $65 billion.

She continues: “Looking ahead to 2016, we expect solid financial performance despite expected continued macroeconomic challenges, particularly in certain key developing and emerging markets. Returning cash to shareholders remains a top priority. We are increasing our dividend per share for the 44th consecutive year, beginning with our June 2016 payment, and we expect to return approximately $7 billion to shareholders through a combination of dividends and share repurchases.”

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