10-KPeriod: FY2019

PEPSICO INC Annual Report, Year Ended Dec 28, 2019

Filed February 13, 2020For Securities:PEP

Summary

PepsiCo Inc. demonstrated resilience in its 2019 fiscal year, reporting a 4% increase in net revenue to $67.2 billion. The company's strategic focus on becoming "Faster, Stronger, and Better" through consumer-centricity, capability transformation, and sustainability initiatives continued to drive its performance. Despite facing challenges like shifting consumer preferences and a competitive landscape, PepsiCo maintained its global leadership in convenient foods and beverages. Financially, the company reported operating profit of $10.3 billion, with a slight decrease in operating profit margin. Key financial activities included significant returns to shareholders through dividends and share repurchases totaling $8.3 billion in 2019, and continued investment in strategic acquisitions like SodaStream. The company also highlighted its ongoing productivity initiatives aimed at cost savings and reinvestment for topline growth. Looking ahead, PepsiCo expressed confidence in its ability to navigate market complexities and deliver sustainable growth.

Financial Highlights

54 data points
Beta

Revenue

$67.16B

55.1% Gross Margin

Net Income

$7.31B

10.9% Net Margin

EPS (Diluted)

$5.20

Total Assets

$78.55B

Cash & Equivalents

$5.57B

Free Cash Flow

$9.65B

Financial Statements
Beta
Revenue$67.16B
Cost of Revenue$30.13B
Gross Profit$37.03B
R&D Expenses$711.00M
SG&A Expenses$26.74B
Operating Income$10.29B
Interest Expense$935.00M
Net Income$7.31B
EPS (Basic)$5.23
EPS (Diluted)$5.20
Shares Outstanding (Basic)1.40B
Shares Outstanding (Diluted)1.41B

Key Highlights

  • 1PepsiCo reported a 4% increase in net revenue for fiscal year 2019, reaching $67.2 billion, driven by volume and effective net pricing across its divisions.
  • 2Operating profit was $10.3 billion, with a slight decline in operating profit margin due to higher advertising and marketing expenses and commodity costs.
  • 3The company returned approximately $8.3 billion to shareholders in 2019 through dividends and share repurchases, signaling a strong commitment to shareholder returns.
  • 4PepsiCo completed the acquisition of SodaStream in late 2018, contributing to growth, and announced an agreement to acquire Pioneer Foods in South Africa, subject to regulatory approvals.
  • 5The company continues to focus on its 'Winning with Purpose' strategy, emphasizing speed, strength, and becoming a better company through innovation, capability enhancement, and sustainability.
  • 6Seven reportable segments (FLNA, QFNA, PBNA, LatAm, Europe, AMESA, APAC) were highlighted, with organizational realignments made to segments in Africa, the Middle East, and South Asia.
  • 7PepsiCo continues to invest in digital capabilities and e-commerce to adapt to the evolving retail landscape.

Frequently Asked Questions

In fiscal year 2019, PepsiCo reported net revenue of $67.2 billion, a 4% increase from the prior year. Operating profit was $10.3 billion, with operating profit margin at 15.3%. The company returned approximately $8.3 billion to shareholders through dividends and share repurchases.

PepsiCo highlighted its ongoing 'Winning with Purpose' strategy focused on becoming Faster, Stronger, and Better. The company completed the acquisition of SodaStream in late 2018, which contributed to its 2019 results, and announced its agreement to acquire Pioneer Foods in South Africa, pending regulatory approval. Investments in digitalization and e-commerce capabilities were also emphasized.

All seven reportable segments showed growth in net revenue. Frito-Lay North America (FLNA) and Latin America (LatAm) showed strong operating profit growth. Europe's performance was boosted by the SodaStream acquisition, while other segments like Quaker Foods North America (QFNA) faced some operating cost pressures.

PepsiCo identified several key risks including changes in consumer preferences (especially towards health and wellness), intense competition, disruptions in the retail landscape (including e-commerce growth), macroeconomic and political volatility in global markets, and evolving regulatory environments concerning packaging, taxes, and product labeling.