The new CEO, Ramon Laguarta, said he did not intend to break the snack and beverage giant, nor to divest himself of the company's bottling business, after a four-month checkup. its global activities.
"We believe that our product and geographic portfolios make sense. And we do not currently see the need to divest or acquire businesses significantly, "Laguarta said in a conference call Friday after PepsiCo released its quarterly results.
Last year, PepsiCo agreed to buy the selzer machine manufacturer SodaStream International Ltd., while its rival, Coca-Cola Co., was buying the Costa Coffee chain. PepsiCo was also asked by Wall Street about maintaining its food business, which sells Doritos, Sabra Hummus and Quaker Oats, as well as its Beverage business, which includes Gatorade, Aquafina and Mountain Dew.
The veteran of PepsiCo, who took office as CEO in October, outlined his plans Friday: accelerate investments in advertising, technology and supply chains to boost growth and capture market share . The company has also launched a new restructuring program that will remove an undisclosed number of jobs and factories over several years.
The firm Purchase, NY, said on Friday that it planned to incur pre-tax restructuring charges of about $ 2.5 billion by 2023, with most of the charges coming from severance pay and other employee related costs. The Company's results for 2018 included restructuring costs of $ 138 million and would commit $ 800 million in the current year.
PepsiCo did not specify the extent of job cuts or plant closures.
The company also said it expects organic revenue – which excludes currency fluctuations, acquisitions and divestments – to grow 4% this year, compared to 3.7% for the year before. 39, past year. The basic result excluding currency fluctuations is expected to fall by around 1%, mainly due to the higher tax rate and investments made this year.
In 2019, PepsiCo plans to make substantial investments in areas such as adding manufacturing capabilities, advertising and marketing, said Chief Financial Officer Hugh Johnston at the earnings call. The company has just sponsored the half-time Super Bowl LIII show and broadcast ads during the National Football League championship game. The company is working to increase its investment in Pepsi and Mountain Dew-based beverages to increase sales in North America.
PepsiCo plans to spend about $ 4.5 billion in investment spending in 2019, an increase of more than $ 1 billion from the previous year. Laguarta said the company "is investing in brand development, sales capacity and supply chain capacity".
The company will also hire more staff to market and supply products to retail customers, Johnston told the Wall Street Journal during an interview Friday. He did not say how much.
Mr. Laguarta, who has succeeded Indra Nooyi as CEO, strives to focus the company's priorities, including accelerating organic revenue growth, cost management, and the use of the resulting cost savings. reinvest in the business. To drive sales growth, PepsiCo has considered increasing advertising, expanding the product line and making packaging changes.
"There is additional growth and other opportunities for us to increase our share" in the PepsiCo categories, the CEO told analysts at the call. "And the process started with, let's see how we can refocus the discretionary funds we have in each of our businesses.[es] against growth opportunities. "
Asked by an analyst about separating the company's snacks and beverages business, Laguarta highlighted the benefits of business continuity. He added that the company is able to show its strength, as in the case of the Super Bowl, when it is able to create displays with products of each category.
Laguarta also told analysts that the company could compete without selling or reorganizing its bottling and distribution business in North America.
completed in 2017. He stated that the beverage industry in North America "will play a very important role in the future of PepsiCo and we are confident that this will produce very good results for us".
The company will be integrating its bottling activities into its five new regional divisions as part of its North American beverage operations, the company told its employees on Friday. The professional publication Beverage-Digest has previously reported changes to bottling.
PepsiCo shares rose 3% to $ 115.91 on Friday after the company expects stronger growth for this year. The fourth quarter sales figure remained stable year-over-year, although it benefited from higher prices in its North American units. Due to higher transportation costs, the beverage maker had planned to increase the prices of some of its Frito-Lay products in October.
Earlier this week, Coca-Cola Co. said it expected a slowdown in sales in 2019. In the last quarter, Coca-Cola said the volume of sales of tea and coffee had risen while the volume of soda sales had dropped. Shares of the company fell 8.4% to $ 45.59 on Thursday.
According to PepsiCo, revenue was $ 19.52 billion in the fourth quarter, according to estimates by analysts surveyed by Refinitiv. The organic business figure rose 4.6%.
Among the PepsiCo segments, Frito-Lay North America had the largest increase in the quarter, with sales up 3.6%. The company's revenues in North America increased by 1.8%.
PepsiCo reported fourth quarter earnings of $ 4.83 billion, or $ 4.83 per share, which included $ 4.93 billion in tax savings. For the comparable quarter of the previous year, the company had a loss of $ 710 million, or 50 cents per share.
Excluding non-recurring items, earnings were $ 1.49 per share, which is in line with analysts' estimates.
Write to Allison Prang at [email protected]