PepsiCo Reports 4.8% Rise In 2020 Revenue

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February 11, 2021 – PepsiCo, Inc. today reported results for the fourth quarter and full-year 2020.

“We ended the year on a strong note with our global beverage business having accelerated while our global snacks and food business remained resilient in the fourth quarter.

Our results were indicative of the strength and resilience of our highly dedicated employees, diversified portfolio, agile supply chain and go-to-market systems and strong marketplace execution even in the face of difficult COVID-19 challenges,” said Chairman and CEO Ramon Laguarta.

Pepsi-BRANDSPUR NIGERIA

“Moving forward, we remain committed to supporting our employees, customers and communities. In addition, we will continue to focus on winning in the marketplace and investing to build competitive advantages that will enable us to become an even Faster, Stronger and Better organization.”

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    “For 2021, we are planning for our organic revenue and core constant currency EPS growth to be consistent with our long-term objectives. We have also announced a 5 per cent increase in our annualized dividend, starting with the June 2021 dividend payment.”

Discussion of Fourth Quarter 2020 Reported Division Results:

In addition to the reported net revenue performance as set out in the tables on pages 3 and A-7, reported operating results were driven by the following:

Frito-Lay North America

Operating profit decreased 4%, primarily reflecting certain operating cost increases and a 5-percentage- point impact of higher restructuring and impairment charges, partially offset by productivity savings and net revenue growth.

Additionally, the charges are taken as a result of the novel coronavirus (COVID-19) pandemic negatively impacted operating profit performance by 2 percentage points.

Quaker Foods North America

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Operating profit grew 17%, primarily reflecting net revenue growth, productivity savings and lower advertising and marketing expenses, partially offset by certain operating cost increases. Additionally, the charges taken as a result of the COVID-19 pandemic reduced operating profit growth by 2 percentage points.

PepsiCo Beverages North America

Operating profit grew 19%, primarily reflecting net revenue growth, productivity savings, lower advertising and marketing expenses and a 6-percentage-point impact of lower commodity costs.

These impacts were partially offset by certain operating cost increases, including incremental information technology costs, a 3-percentage-point impact of a prior-year gain on an asset sale and a 2-percentage-point impact of the charges taken as a result of the COVID-19 pandemic. Acquisitions contributed 10 percentage points to operating profit growth.

In the fourth quarter of 2020, we received notice of termination without cause from Vital Pharmaceuticals, Inc., which would end our distribution rights of Bang Energy drinks, effective October 24, 2023.

Latin America

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Operating profit decreased 7%, primarily reflecting certain operating cost increases and a 15-percentage- point impact of higher commodity costs largely due to transaction-related foreign exchange, partially offset by productivity savings, effective net pricing and a 4.5-percentage-point impact of certain tax credits in Brazil.

Additionally, unfavourable foreign exchange and the charges taken as a result of the COVID-19 pandemic each negatively impacted operating profit performance by 10 percentage points.

Europe

Operating profit decreased 10%, primarily reflecting certain operating cost increases, a 10-percentage- point impact of higher commodity costs due to transaction-related foreign exchange and a 4.5- percentage-point impact of certain tax charges.

These impacts were partially offset by organic volume growth and productivity savings. Additionally, the charges are taken as a result of the COVID-19 pandemic and unfavourable foreign exchange negatively impacted operating profit performance by 5 percentage points and 4 percentage points, respectively.

Africa, the Middle East and South Asia

Operating profit grew 80%, primarily reflecting productivity savings, a 27-percentage-point contribution from the Pioneer Food Group Ltd. (Pioneer Foods) acquisition, organic volume growth, a 20-percentage- point impact of lower restructuring and impairment charges, lower advertising and marketing expenses and a 3-percentage-point impact of lower commodity costs.

These impacts were partially offset by certain operating cost increases, unfavourable net pricing and a 7-percentage-point impact of the settlement of a legal claim in the prior year.

Additionally, the charges taken as a result of the COVID-19 pandemic reduced operating profit growth by 7 percentage points.

Asia Pacific, Australia and New Zealand and China Region

Operating profit grew 7%, primarily reflecting productivity savings, net revenue growth, an 8-percentage- point impact of favourable settlements of promotional spending accruals compared to the prior year and a 6-percentage-point impact of lower restructuring and impairment charges.

These impacts were partially offset by certain operating cost increases and higher advertising and marketing expenses. An operating loss for Hangzhou Haomusi Food Co., Ltd.

(Be & Cheery) and inventory fair value adjustments and merger and integration charges associated with the Be & Cheery acquisition reduced operating profit growth by 5 percentage points and 3 percentage points, respectively.

Dividend Increase

The Company today announced a 5 percent increase in its annualized dividend to $4.30 per share from

$4.09 per share, effective with the dividend expected to be paid in June 2021. This represents the Company’s 49th consecutive annual dividend per share increase.

Guidance and Outlook

The Company provides guidance on a non-GAAP basis as we cannot predict certain elements which are included in reported GAAP results, including the impact of foreign exchange translation and commodity mark-to-market net impacts.

For 2021, the Company expects:

A mid-single-digit increase in organic revenue;
A high-single-digit increase in core constant currency EPS;

A core annual effective tax rate of approximately 21 percent; and
Total cash returns to shareholders of approximately $5.9 billion, comprised of dividends of approximately $5.8 billion and share repurchases of approximately $100 million.

We have recently completed our share repurchase activity and do not expect to repurchase any additional shares for the balance of 2021.

In addition, the Company expects a 1 percentage-point foreign exchange translation tailwind to benefit reported net revenue and core EPS growth based on current market consensus rates.

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