Summary
PepsiCo, Inc. (PEP) filed an 8-K on February 15, 2019, announcing a significant multi-year productivity plan initiated on February 14, 2019. This plan, termed the '2019 Productivity Plan,' aims to leverage new technologies and business models to streamline operations, automate processes, re-engineer go-to-market strategies, and optimize its supply chain. The company anticipates incurring pre-tax charges of approximately $2.5 billion related to this initiative, with a portion ($138 million) recognized in 2018 results, and the remainder spread from 2019 through 2023. These charges are primarily composed of severance and employee-related costs (70%), non-cash asset impairments from plant closures (15%), and implementation costs (15%).
Key Highlights
- 1PepsiCo launched a '2019 Productivity Plan' focused on simplification, automation, and supply chain optimization.
- 2The company expects to incur approximately $2.5 billion in pre-tax charges related to this plan.
- 3Approximately $138 million of these charges were already included in 2018 financial results.
- 4The majority of the charges and cash expenditures are expected between 2019 and 2020.
- 5The charges consist primarily of severance (70%), non-cash asset impairments (15%), and other implementation costs (15%).
- 6The plan is intended to improve efficiency through new technology and business models.
- 7Significant cash expenditures of approximately $1.6 billion are projected, with a portion in 2019 and the remainder through 2023.