PepsiCo 4th-quarter profit falls 43 percent
NEW YORK -- PepsiCo Inc., the global snacks and soda maker, said Friday that its fourth-quarter profit fell 43 percent as the stronger dollar shrunk profits and it took big restructuring charges. But its adjusted results met analyst expectations.
The world's second-biggest beverage maker after Coca-Cola Co. earned $719 million, or 46 cents per share, down from $1.26 billion, or 77 cents per share, a year earlier.
Excluding restructuring and other one-time items, the seller of Pepsi, Gatorade and Tropicana earned $1.39 billion, or 88 cents per share. That matched a consensus estimate from analysts polled by Thomson Reuters.
PepsiCo, which owns Frito-Lay and brands such as Doritos and Sun Chips, said revenue climbed 3 percent to $12.73 billion from $12.35 billion. Analysts had expected $12.8 billion.
Like other global consumer products makers, PepsiCo and Coca-Cola have struggled as the dollar's value has risen against other currencies since last fall. Companies that do significant business overseas suffer when the dollar strengthens because their overseas sales and operations in other currencies then translate into fewer dollars.
Atlanta-based Coca-Cola said Thursday in reporting its fourth-quarter results that it was also hurt by a stronger dollar and write-downs at its biggest bottler. While its global sales volume rose 4 percent, its quarterly profit fell 18 percent and the stronger dollar took 9 percent off its operating income.
At Purchase, N.Y.-based PepsiCo, the dollar's strength hurt operating income by 5 cents per share.
If the dollar maintains its current strength, adjusted profit could be 8 percentage points lower in 2009, PepsiCo predicted. The company certainly expects to feel an impact from foreign exchange, said Chief Financial Officer Richard Goodman said.
"It's so hard to actually predict what currencies are going to be," Goodman told The Associated Press. "The volatility is enormous."
During the quarter, PepsiCo took a pretax restructuring cost of $543 million for layoffs and the shuttering of six plants, as well as a $227 million reduction in the value of commodity hedges it has made.
PepsiCo has laid off 3,500 employees and closed six plants as part of an effort to cut $1.2 billion in costs by 2011. Goodman said no more job cuts were planned, but it "depends on how the economy progresses."
Chief Executive Indra Nooyi told investors on a conference call that PepsiCo was "cautiously optimistic about 2009."
Shares rose 91 cents to $52.91 in early afternoon trading.
The company predicts that the first half of the year, especially the first quarter, will have the hardest year-over-year comparisons because of commodity costs and the stronger dollar.
At PepsiCo Americas Foods, revenue climbed 5 percent, while Frito-Lay North America reported 7 percent sales growth. Quaker Foods North America revenue grew 2 percent and Latin America Foods' sales edged up 1 percent.
PepsiCo Americas Beverages posted a 10 percent sales decline as the North American soft drink industry saw its first year-over year sales decline. PepsiCo has launched a new marketing campaign to bring consumers back to soft drinks such as signature Pepsi, Sierra Mist and Mountain Dew. The promotional push includes a new Pepsi logo, more ads in public spaces and a new 16-ounce soda can to be sold for 99 cents.
For the full year, PepsiCo's profit fell 9 percent to $5.14 billion, or $3.21 per share, from $5.66 billion, or $3.41 per share, in the prior year. Adjusted earnings were $5.89 billion, or $3.68 per share. Annual revenue rose 10 percent to $43.25 billion.