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PepsiCo Q3 net revenue 5% down, 2012 outlook stable

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Staff writer |
PepsiCoFood and beverages company PepsiCo reported the fall of net revenue of 5 percent in Q3. However, without structural changes and a negative impact from foreign exchange translation, the third quarter net revenue grew 5 percent on an organic basis.

The company made $1.9 billion net profit during the third quarter, down from $2 billion a year earlier. Organic net revenue growth was 5 percent. Reported net revenue benefited from 1 percentage point of volume growth and 4 percentage points of effective net pricing, offset by negative foreign exchange translation of 5 percentage points. Structural changes, primarily refranchisings in China and Mexico, negatively impacted reported net revenue performance by 5 percentage points.

PepsiCo CEO Indra Nooyi"PepsiCo is diligently executing the strategy we set forth at the start of the year, and we remain on track to achieve our full-year targets. Our disciplined pricing and sustained investment in brand building drove 5 percent organic net revenue growth reflecting 1 percent organic volume growth and 4 percent effective net pricing," said PepsiCo Chairman and CEO Indra Nooyi.

Operating cash flow was $5.1 billion year to date. Management operating cash flow (excluding certain items) was $4.9 billion. The company has returned $4.8 billion to shareholders through dividends and share repurchases through the end of the third quarter, and expects to return more than $6 billion to shareholders for the full year 2012.

Reported EPS was $1.21 and core EPS was $1.20. Core EPS excludes a $0.04 per share impact of certain restructuring, impairment and integration charges and a $0.05 per share impact from mark-to-market net gains on commodity hedges. Mark-to-market gains and losses are subsequently reflected in core division results when the divisions take delivery of the underlying commodity.

For 2012, PepsiCo is targeting approximately $8 billion in cash flow from operating activities and more than $6 billion in management operating cash flow in 2012. Reflecting its commitment to return capital to shareholders, the company anticipates more than $3 billion in share repurchases for 2012, and expects to pay $3.3 billion in dividends.

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