01—Abstract
Summary
Summary of the 10-K filed February 13, 2018. Cited figures are marked; the original filing is the authoritative source.
PepsiCo, Inc. (PEP) reported its 2017 annual results, highlighting a year of growth driven by productivity initiatives and effective net pricing across its diverse portfolio of food and beverage brands.
The company generated consolidated net revenue of $63.5 billiona, a 1% increase over the prior year, with operating profit rising by 7% to $10.5 billion. Key drivers of this performance included significant cost reductions from productivity programs and strategic pricing actions. While the company navigated various business risks, including macroeconomic volatility and shifting consumer preferences towards healthier options, it demonstrated resilience.
The report also detailed the impact of the Tax Cuts and Jobs Act of 2017, which resulted in a provisional net tax expense for the year. PepsiCo remains focused on its "Performance with Purpose" strategy, emphasizing innovation, e-commerce expansion, and sustainability initiatives to drive long-term shareholder value.
02—Key points
Key Highlights
- Consolidated net revenue increased by 1% to $63.5 billion, driven by effective net pricing and productivity initiatives.
- Operating profit grew by 7% to $10.5 billion, with operating margin improving by 1.0 percentage point, benefiting from cost reductions and strategic pricing.
- Frito-Lay North America (FLNA) saw a 2% net revenue increase, supported by effective net pricing, although volume saw a slight decline.
- North America Beverages (NAB) experienced a 2% decrease in net revenue, impacted by a volume decline in both carbonated soft drinks and non-carbonated beverages.
- Latin America's net revenue increased by 6%, primarily due to effective net pricing, despite volume declines.
- Europe Sub-Saharan Africa (ESSA) reported an 8% increase in net revenue, driven by volume growth, effective net pricing, and favorable foreign exchange.
- Asia, Middle East and North Africa (AMENA) saw a 5% decrease in net revenue, largely due to unfavorable foreign exchange, though snacks volume grew.
- The company repurchased $4.5 billion of its common stock during the fourth quarter of 2017, demonstrating a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Pepsico Inc kept $0.08.
- Revenue$63.52B100.0%
- Cost of revenue−$28.80B45.3%
- Gross profit$34.73B54.7%
- Operating costs−$24.45B38.5%
- Operating income$10.28B16.2%
- Interest, other & tax−$5.42B8.5%
- Net income$4.86B7.6%
Where FY2017 revenue went
$63.52B- Cost of revenue: $28.80B, 45% of revenue
- SG&A: $24.45B, 38% of revenue
- Net income: $4.86B, 7.6% of revenue
- R&D: $737.0M, 1.2% of revenue
- Interest, other & tax: $5.42B, 8.5% of revenue
Kept 7.6% as net incomeNet income $4.86B · 7.6%R&D $737.0M · 1.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 13, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $63.52B$62.80B | +1.2% |
| Cost of Revenue | $28.80B$28.22B | +2.0% |
| Gross Profit | $34.73B$34.58B | +0.4% |
| R&D Expenses | $737.00M$760.00M | −3.0% |
| SG&A Expenses | $24.45B$24.77B | −1.3% |
| Operating Income | $10.28B$9.80B | +4.8% |
| Interest Expense | $1.15B$1.34B | −14.2% |
| Net Income | $4.86B$6.33B | −23.3% |
| EPS (Basic) | $3.40$4.39 | −22.6% |
| EPS (Diluted) | $3.38$4.36 | −22.5% |
| Shares Outstanding (Basic) | 1.43B1.44B | −1.0% |
| Shares Outstanding (Diluted) | 1.44B1.45B | −1.0% |
05—Questions
Frequently Asked Questions
What was PepsiCo's net revenue and operating profit for fiscal year 2017?
PepsiCo reported consolidated net revenue of $63.5 billion and operating profit of $10.5 billion for the fiscal year ended December 30, 2017.
What are the main drivers of PepsiCo's performance in 2017?
The company's performance was primarily driven by its productivity initiatives, which contributed over $1 billion in cost reductions, and effective net pricing across its various segments.
How did the Tax Cuts and Jobs Act (TCJA) impact PepsiCo's financial results in 2017?
The TCJA resulted in a provisional net tax expense of $2.5 billion in the fourth quarter of 2017, primarily due to a mandatory one-time transition tax on undistributed international earnings and a benefit from the remeasurement of deferred tax assets and liabilities to the new, lower U.S. corporate income tax rate.
What is PepsiCo's strategy for future growth and profitability?
PepsiCo's 'Performance with Purpose' strategy focuses on utilizing its distribution strength to offer a diverse product portfolio, strengthening retail relationships, minimizing environmental impact, investing in talent, and expanding e-commerce and digital solutions.
06—Continue