PepsiCo Inc. on Thursday named some key executives to expanded posts and said fourth-quarter profit jumped 21 per cent, driven by a 4 per cent volume increase as consumers tried its new snacks and drinks.
PepsiCo also created a new division within Frito-Lay to focus on its core salty snacks, which include Lay's potato chips and Doritos tortilla chips.
Among the changes are an expanded innovation role for President and Chief Financial Officer Indra Nooyi. The company also named two chief executives of major units as chairmen within their divisions.
PepsiCo, whose brands include such household names as Frito-Lay snacks and Pepsi-Cola soft drinks, said it believes that in the long run it can "sustainably" increase volume and net revenue at mid-single digit percentage rates and earnings per share at a low double-digit percentage rate.
The company's shares fell almost 4 per cent on the heels of the news and traded down $1.19, or 2.9 per cent, at $39.89 on the New York Stock Exchange at mid-morning.
PepsiCo posted earnings of $805 million, or 46 cents per share, for the quarter ended Dec. 28, compared with $667 million, or 37 cents per share, in the year-ago period.
On a comparable basis the Purchase, New York, company said it earned 50 cents per share, matching analysts' average estimate compiled by Thomson First Call.
The comparable figure accounts for the adoption of an accounting change and the consolidation of a European snack joint venture as if they occurred at the beginning of 2001 and excludes items related to the 2001 Quaker Oats acquisition.
"Pepsi's numbers were a little bit better then we were looking for," said Davenport & Co. analyst Ann Gurkin, who rates PepsiCo a "buy" and does not own the shares.
Gurkin said PepsiCo's U.S. beverage revenue was a bit stronger than she had anticipated, Frito-Lay "showed nice improvements in margins" and Gatorade's 23 per cent volume growth was much higher than expectations.
Overall volume climbed 4 per cent in the quarter, with snacks up 5 per cent and beverages up 3 per cent, the company said.
PepsiCo, whose long list of products also includes Gatorade sports drinks and Quaker cereals, said sales rose to $7.46 billion from $6.97 billion a year earlier.
In recent months, PepsiCo has come out with new products such as portable plastic cans of its well-known snacks such as Doritos. The company also introduced new soft drinks, such as Mountain Dew Code Red and Pepsi Blue, over the past few years.
Pepsi is battling new products from top rival Coca-Cola Co., which has done well with Vanilla Coke, a drink it launched last year. Atlanta-based Coca-Cola is expected to report its fourth-quarter results on Feb. 12.
Two leaders to resign, others get new roles
PepsiCo said two international executives, Rogelio Rebolledo of Frito-Lay International and Peter Thompson of PepsiCo Beverages International, plan to retire in 2004.
It also said Frito-Lay CEO Al Bru took on an additional post as chairman of the unit.
Gary Rodkin, who was named president and CEO of PepsiCo Beverages & Foods in June 2002, was promoted to chairman and CEO of that division, which includes Pepsi-Cola, Tropicana, Gatorade and Quaker Foods.
PepsiCo also created a new division, PepsiCo International, encompassing its beverage and food operations outside of the United States and Canada.
The company said the integration of Quaker Oats is proceeding ahead of schedule and that it realized about $250 million in savings from the merger in 2002. PepsiCo said it expects to save $400 million in annual costs from the deal by the end of 2004.