Milling & Baking News Corporate Profiles - November 2013 - (Page 116)

Company Overview PepsiCo, Inc. Company has no plans to split P epsiCo, Inc. executives in 2013 gave no indication they would split up the company even after a major shareholder urged them to do so. Trian Fund Management, L.P., which owns more than $1.3 billion of shares of common stock of PepsiCo, Purchase, N.Y., released a white paper in July seeking action. "While it has a leading portfolio of 22 billion-dollar brands, PepsiCo has underperformed its peers as it grapples with the differing needs of its fast-growth (snacks) and slow-growth (beverages) businesses and the resulting inherent conflict in allocating its resources," the white paper said. Trian Fund Management offered two alternatives. For one, PepsiCo could merge with Mondelez International and then spin off its beverage business. Trian estimated the actions could lead to about $175 of implied value per PepsiCo share and about $72 of implied value per Mondelez share by the end of 2015. The second alternative was to separate the snacks business from the beverages business. Trian estimated that strategy could lead to about $136 to $144 of implied value per share by the end of 2015. Hugh Johnston, chief financial officer of PepsiCo, in a July 24 television interview with Fox Business said the current PepsiCo product portfolio is working well. "What you see happening is, beverages is reinforcing snacks and snacks is reinforcing beverages," he said in the interview. "We really do feel like this portfolio is just working terrifically well." Company financial results for the 24 weeks ended June 15 were strong. PepsiCo had net income of $3,110 million, or $1.97 per share, up from $2,634 million, or $1.65 per share, in the same time period of the previous fiscal year. For the 2013 fiscal year, the company expected 7% core constant currency e.p.s. growth versus fiscal 2012 core e.p.s. of $4.10. PepsiCo's Frito-Lay North America business through the 24 weeks ended June 15 had operating profit of $1,734 million, up 7%, and net revenue of $6,455 million, up 4%. PepsiCo Americas Beverages during the same time period had operating profit of $1,447 million, up 6%, and net revenue of $9,680 million, down 1%. Chief executive officer - Top brands - 2012 global sales - Indra Nooyi 116 \ November 2013 "We will continue to invest in breakthrough innovation and new technologies that have potential to reframe the beverage category, by removing some of the compromises that consumers face with regard to calories and ingredients," said Indra Nooyi, chairman and chief executive officer of PepsiCo, Inc., in a July 24 earnings conference call. "In addition, as we have said in the past, we are also exploring every possible alternative, including structural alternatives, to further improve our margins and returns in the business." Innovation was encouraging, Ms. Nooyi said. Mountain Dew Kickstart, Tropicana Farmstand and Starbucks Iced Coffee each showed potential to become $100 million-plus at retail platforms. Strong marketing and merchandising led to value share gains by Gatorade in sports drinks and in PepsiCo's coffee, tea and chilled juice businesses, Ms. Nooyi said. Also in the 24 weeks ended June 15, Quaker Foods North America had operating profit of $313 million, down 8%, and net revenue of $1,211 million, up 0.5%. Twenty-four week operating profit for Latin America Foods was $534 million, up 16%. CP $55.5 billion Pepsi Mountain Dew Doritos Cheetos Quaker Tropicana Gatorade Milling & Baking News * Food Business News * Baking & Snack * Meat & Poultry Corporate Profiles

Table of Contents for the Digital Edition of Milling & Baking News Corporate Profiles - November 2013

Milling & Baking News Corporate Profiles - November 2013