Summary
PepsiCo Inc. (PEP) filed an 8-K on September 8, 2015, providing an update on its fiscal year 2015 financial guidance ahead of the Barclays Back-to-School Consumer Conference. The company reaffirmed its expectation for 8% core constant currency EPS growth compared to fiscal year 2014. Additionally, PepsiCo anticipates mid-single-digit organic revenue growth. Investors should note the significant unfavorable impact expected from foreign exchange translation, estimated at approximately 11 percentage points on core EPS and 9 percentage points on net revenue growth for the full year. The company also reiterated its commitment to returning capital to shareholders, projecting free cash flow of over $7 billion (excluding certain items). This is expected to support total shareholder returns of $8.5 billion to $9 billion, comprising approximately $4 billion in dividends and $4.5 billion to $5 billion in share repurchases. The filing also details PepsiCo's ongoing productivity initiatives and provides context on potential impacts from Venezuela's currency exchange mechanisms.
Key Highlights
- 1Reaffirmed fiscal 2015 guidance for 8% core constant currency EPS growth.
- 2Maintained expectation for mid-single-digit organic revenue growth in fiscal 2015.
- 3Significant unfavorable foreign exchange impact anticipated: ~11% on core EPS and ~9% on net revenue.
- 4Projected free cash flow to exceed $7 billion (excluding certain items).
- 5Planned shareholder returns of $8.5 - $9 billion, split between dividends (~$4 billion) and share repurchases (~$4.5 - $5 billion).
- 6Details ongoing multi-year productivity plans aimed at strengthening businesses and driving efficiency.
- 7Provides extensive discussion on the complexities and potential financial impacts of Venezuela's currency exchange rates.