01—Abstract
Summary
Summary of the 10-K filed February 9, 2023. Cited figures are marked; the original filing is the authoritative source.
PepsiCo, Inc. reported robust performance in its 2022 fiscal year, demonstrating resilience amidst a challenging global economic environment.
The company achieved significant net revenue growth, driven by effective net pricing and organic volume expansion across its diverse portfolio of beverages and convenient foods. Despite facing inflationary pressures, supply chain disruptions, and geopolitical uncertainties stemming from the conflict in Ukraine, PepsiCo successfully navigated these headwinds, supported by its strategic "pep+" transformation initiative, which emphasizes sustainability and human capital. Key financial highlights include strong revenue growth across most segments, with notable contributions from Frito-Lay North America (FLNA) and PepsiCo Beverages North America (PBNA).
While operating profit saw an increase, operating margins experienced a slight decline due to various one-time charges, including impairments related to intangible assets and the impact of the Russia-Ukraine conflict. The company continued its commitment to returning value to shareholders through increased dividends and share repurchases, signaling confidence in its future financial health and operational capabilities. Investors will note the strategic divestiture of the juice portfolio, which generated a significant gain, and continued investments in innovation and sustainability initiatives.
02—Key points
Key Highlights
- PepsiCo reported strong net revenue growth of 9% for the fiscal year 2022, reaching $86.4 billion.
- The company announced a 10.0% increase in its annualized dividend to $5.06 per share, signaling confidence in its financial stability.
- Significant impairment charges totaling $3.2 billion were recorded, primarily related to indefinite-lived intangible assets (e.g., SodaStream brand) and the impact of the Russia-Ukraine conflict, affecting operating margins.
- The divestiture of the Tropicana, Naked, and other select juice brands to PAI Partners was completed in Q1 2022, resulting in a substantial gain recognized in PBNA and Europe segments.
- The 'pep+' (PepsiCo Positive) strategy continues to drive transformation, focusing on sustainable agriculture, a positive value chain (net-zero emissions by 2040, net water positive by 2030), and healthier consumer choices.
- Key divisions like Frito-Lay North America (FLNA) and PepsiCo Beverages North America (PBNA) showed strong performance, with FLNA net revenue up 19% and PBNA operating profit up 122% (largely due to the juice transaction gain).
- The company repurchased $1.5 billion of its common stock in 2022 and plans for approximately $1.0 billion in share repurchases in 2023, alongside $6.7 billion in dividends.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Pepsico Inc kept $0.10.
- Revenue$86.39B100.0%
- Cost of revenue−$40.58B47.0%
- Gross profit$45.82B53.0%
- Operating costs−$34.30B39.7%
- Operating income$11.51B13.3%
- Interest, other & tax−$2.60B3.0%
- Net income$8.91B10.3%
Where FY2022 revenue went
$86.39B- Cost of revenue: $40.58B, 47% of revenue
- SG&A: $34.46B, 40% of revenue
- Net income: $8.91B, 10% of revenue
- R&D: $771.0M, 0.9% of revenue
- Interest, other & tax: $2.60B, 3.0% of revenue
Kept 10% as net incomeNet income $8.91B · 10%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 9, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $86.39B$79.47B | +8.7% |
| Cost of Revenue | $40.58B$37.08B | +9.4% |
| Gross Profit | $45.82B$42.40B | +8.1% |
| R&D Expenses | $771.00M$752.00M | +2.5% |
| SG&A Expenses | $34.46B$31.24B | +10.3% |
| Operating Income | $11.51B$11.16B | +3.1% |
| Interest Expense | $939.00M$1.86B | −49.6% |
| Net Income | $8.91B$7.62B | +17.0% |
| EPS (Basic) | $6.45$5.51 | +17.1% |
| EPS (Diluted) | $6.42$5.49 | +16.9% |
| Shares Outstanding (Basic) | 1.38B1.38B | −0.1% |
| Shares Outstanding (Diluted) | 1.39B1.39B | −0.1% |
05—Questions
Frequently Asked Questions
What was PepsiCo's overall financial performance in 2022?
PepsiCo demonstrated strong performance in 2022, with a 9% increase in net revenue to $86.4 billion. The company managed to increase operating profit by 3% to $11.5 billion, despite facing challenges like inflation and supply chain disruptions. However, operating margin decreased slightly to 13.3% due to significant impairment charges and costs associated with the Russia-Ukraine conflict.
How did the divestiture of the juice brands impact PepsiCo's financials?
The sale of Tropicana, Naked, and other select juice brands in early 2022 resulted in a significant gain, reported in the PBNA and Europe segments. This transaction contributed positively to net income and EPS for the year, although it also meant a loss of net revenue from those discontinued operations.
What are the key risks and challenges highlighted in the report?
PepsiCo identified several key risks, including the ongoing geopolitical uncertainty from the Russia-Ukraine conflict, which affects commodity markets and supply chains. Other significant risks include fluctuating commodity prices, supply chain disruptions, labor shortages, adverse weather conditions, changes in consumer preferences and demand, damage to brand reputation, and increased regulatory scrutiny and taxes on products. The company also noted the impact of climate change on its operations and supply chain.
What is PepsiCo's strategy for growth and sustainability?
PepsiCo's 'pep+' (PepsiCo Positive) strategy is central to its approach, aiming for end-to-end transformation with sustainability and human capital at its core. Key pillars include Positive Agriculture (regenerative practices, sustainable sourcing), Positive Value Chain (net-zero emissions by 2040, net water positive by 2030, circular packaging solutions), and Positive Choices (portfolio evolution towards healthier products, scaling businesses like SodaStream). This strategy guides their efforts to create growth and value while operating within planetary boundaries.
06—Continue