10-QPeriod: Q1 FY2013

PEPSICO INC Quarterly Report for Q1 Ended Mar 23, 2013

Filed April 19, 2013For Securities:PEP

Summary

PepsiCo Inc. reported modest revenue growth for the first quarter of 2013, with net revenue increasing by 1% to $12.58 billion compared to the prior year period. However, operating profit saw a decline of 4% to $1.66 billion, primarily due to significant one-time charges, including a $111 million after-tax hit from the Venezuelan currency devaluation and $11 million in restructuring charges. Excluding these items, operating profit showed a positive trend, increasing by 5% on a constant currency basis. Diluted earnings per share (EPS) decreased by 3% to $0.69, also impacted by these comparability items. Despite the slight dip in profitability, the company demonstrated strong operational execution in several segments, with Latin America Foods, PepsiCo Americas Beverages, Europe, and Asia, Middle East & Africa segments showing positive operating profit growth on a constant currency basis. The company also highlighted a 4% increase in total servings and initiated a new share repurchase program alongside a planned dividend increase, signaling confidence in its future cash generation and commitment to returning capital to shareholders. The balance sheet remains solid with healthy cash and cash equivalents.

Financial Highlights

50 data points
Beta

Revenue

$12.58B

53.6% Gross Margin

Net Income

$1.07B

8.5% Net Margin

EPS (Diluted)

$0.69

Total Assets

$75.36B

Cash & Equivalents

$6.71B

Free Cash Flow

$702.00M

Financial Statements
Beta
Revenue$12.58B
Cost of Revenue$5.83B
Gross Profit$6.75B
SG&A Expenses$5.07B
Operating Income$1.66B
Interest Expense$214.00M
Net Income$1.07B
EPS (Basic)$0.69
EPS (Diluted)$0.69
Shares Outstanding (Basic)1.54B
Shares Outstanding (Diluted)1.56B

Key Highlights

  • 1Net revenue grew slightly by 1% to $12.58 billion, indicating stable top-line performance.
  • 2Operating profit declined by 4% to $1.66 billion, largely due to $111 million (after-tax) from Venezuela devaluation and $11 million in restructuring charges.
  • 3Excluding items affecting comparability, operating profit increased by 5% on a constant currency basis, demonstrating underlying operational strength.
  • 4Diluted EPS decreased by 3% to $0.69, reflecting the impact of the aforementioned charges.
  • 5The company declared a 5.6% increase in its annualized dividend to $2.27 per share, effective June 2013.
  • 6A new $10 billion share repurchase program was announced, commencing July 1, 2013, demonstrating commitment to shareholder returns.
  • 7Total servings increased by 4% year-over-year, indicating positive volume momentum across the business.

Frequently Asked Questions

The decrease in operating profit was primarily driven by 'items affecting comparability,' which included a significant charge of $111 million (after-tax) related to the devaluation of the Venezuelan currency and $11 million in restructuring and impairment charges. Excluding these one-time items, operating profit actually showed growth.

The Venezuelan government devalued its currency in February 2013, leading PepsiCo to record an after-tax net charge of $111 million due to the remeasurement of bolivar-denominated net monetary assets. This had a material impact on reported net income and EPS for the quarter.

PepsiCo announced a 5.6% increase in its annualized dividend to $2.27 per share and a new $10 billion share repurchase program to commence in July 2013. The company expects to return approximately $6.4 billion to shareholders in 2013 through a combination of dividends and share repurchases.

Most segments showed positive performance, especially on a constant currency basis. Frito-Lay North America saw revenue and operating profit growth. Latin America Foods had strong revenue growth. PepsiCo Americas Beverages experienced a slight revenue dip but operating profit growth. Europe and Asia, Middle East & Africa segments also reported revenue and operating profit increases, with strong volume growth in snacks and beverages in the latter.