Cost cutting helps drive profit rise at PepsiCo

Posted by Daniel Palmer on 9th October 2009

PepsiCo has beaten Wall Street’s profit expectations for the third quarter despite revenue falling short of forecasts.

The food and beverage giant was, like many American-based global manufacturers, hurt by the weakness of the US Dollar but managed to deliver 5 per cent revenue growth on a constant currency basis and profit growth of 8.9%.

Indra Nooyi, PepsiCo Chairman and Chief Executive Officer, said the company’s focus on innovation had served them well and expected further improvement in global conditions over the coming year.

“PepsiCo’s diversified food and beverage portfolio and our advantaged business model continued to drive solid results this quarter,” she said. “Our teams around the world leveraged PepsiCo’s agile go-to-market system to deliver our brands at differentiated value to consumers, who are still feeling the pinch of the global recession despite improving macroeconomic indicators.”

During the quarter the company announced the acquisition of their two largest bottlers (both based in America), with completion of these purchases expected by early next year.

“We will continue to make targeted investments across our entire portfolio, and we expect these to ramp up next year as we begin to realise the benefits of the integration of our two anchor bottlers,” Ms Nooyi added. “These investments in innovation, infrastructure, key markets and people development, coupled with our operating agility and focus, give me great confidence in both the near-and long-term growth prospects of PepsiCo.”

Asia/Middle East/Africa (AMEA) net revenue grew 13 per cent and operating profit improved 52 per cent as developing economies boosted sales. Beverage volume in the region grew nine per cent and snacks volume rose a robust eight per cent and was “geographically broad based”. Australian results were impacted by the strength of the currency, however.