Summary
PepsiCo, Inc. (PEP) filed an 8-K on May 29, 2013, to provide an update on its financial performance and outlook, primarily in advance of the Sanford Bernstein Strategic Decisions Conference. The company expressed confidence in achieving its long-term financial objectives, which include mid-single-digit organic revenue growth, 6-7% core constant currency operating profit growth, and high-single-digit core constant currency EPS growth. For fiscal year 2013, PepsiCo reaffirmed its guidance, projecting 7% core constant currency EPS growth over its 2012 core EPS of $4.10, while noting an anticipated unfavorable foreign exchange impact of approximately 1% and a similar impact from structural changes like beverage refranchisings. The company also highlighted its ongoing focus on generating significant productivity savings, expecting approximately $900 million in 2013, and its commitment to returning substantial cash to shareholders. In 2013, PepsiCo planned to return $6.4 billion to shareholders through $3.4 billion in dividends and $3.0 billion in share repurchases. Furthermore, the company provided targets for cash flow generation, expecting over $9 billion in cash flow from operating activities and more than $7 billion in management operating cash flow.
Key Highlights
- 1PepsiCo reaffirmed its 2013 financial guidance, expecting 7% core constant currency EPS growth versus fiscal 2012 core EPS of $4.10.
- 2The company reiterated its long-term financial targets: mid-single-digit organic revenue growth, 6-7% core constant currency operating profit growth, and high-single-digit core constant currency EPS growth.
- 3PepsiCo anticipates generating approximately $900 million in productivity savings in 2013, indicating a continued focus on operational efficiency.
- 4A significant return of capital to shareholders is planned for 2013, totaling $6.4 billion, comprising $3.4 billion in dividends and $3.0 billion in share repurchases.
- 5The company expects strong cash flow generation in 2013, targeting over $9 billion in operating cash flow and more than $7 billion in management operating cash flow.
- 6Foreign exchange translation is expected to have an unfavorable impact of approximately 1% on full-year 2013 core EPS.
- 7Structural changes, primarily beverage refranchisings, are also expected to reduce organic revenue growth by approximately 1% for the full year 2013.