PepsiCo announces 2018 financial results
NAB operating profit decreased 16% for the year
PepsiCo Inc., Purchase, N.Y., reported results for the fourth quarter and full year 2018.
“We are pleased with our results for the fourth quarter and the full year 2018. For the year we met or exceeded each of the financial objectives we set out at the beginning of the year. Frito-Lay North America and each of our international sectors performed very well, and our North America Beverages sector made progress throughout the year,” said Chairman and Chief Executive Officer Ramon Laguarta in a statement. “While adverse foreign exchange translation negatively impacted reported net revenue performance, our underlying organic revenue growth accelerated in the second half, and we ended the year with 4.6% organic revenue growth in the fourth quarter. Furthermore, we are excited about the outlook for our business. We are well positioned in large, growing categories and have developed strong and relevant capabilities over the years. In 2019, we aim to capitalize on the momentum we have as we enter the year, and to continue to invest in the capabilities that will better position us for success for years to come.
“For 2019, we expect 4 percent organic revenue growth and approximately 1 percent decline in core constant currency EPS,” he continued. “Our 2019 EPS performance is expected to be impacted by incremental investments that are intended to further strengthen the business, lapping a number of 2018 strategic asset sale and refranchising gains and an increased core effective tax rate in 2019. Importantly, we expect to return to high-single-digit core constant currency EPS growth in 2020.”
For the fourth quarter, reported net revenue was even with the prior year. Foreign exchange translation had a 4-percentage point unfavorable impact on reported net revenue performance and acquisitions, and divestitures had an unfavorable impact of 1 percentage point. Organic revenue, which excludes the impacts of foreign exchange translation, acquisitions, divestitures, structural and other changes, grew 4.6 percent, it says.
For the North America Beverages (NAB) division, operating profit declined 12 percent, reflecting certain operating cost increases, including increased transportation costs, a 9 percentage point impact of higher commodity costs and higher advertising and marketing expenses. These impacts were partially offset by net revenue growth, productivity savings and a 4 percentage point impact of prior-year hurricane-related costs, it says.
For the full year, reported net revenue increased 2 percent. Foreign exchange translation and acquisitions and divestitures each had an unfavorable impact of 1 percentage point. Organic revenue, which excludes the impacts of foreign exchange translation, acquisitions, divestitures, structural and other changes, grew 4 percent.
For NAB, operating profit decreased 16 percent, reflecting certain operating cost increases, including increased transportation costs, a 7 percentage point impact of higher commodity costs and higher advertising and marketing expenses. These impacts were partially offset by productivity savings and net revenue growth. Higher gains on asset sales positively contributed 1.5 percentage points to operating profit performance. A bonus extended to certain U.S. employees in connection with the TCJ Act negatively impacted operating profit performance by 1.5 percentage points and was partially offset by prior-year costs related to hurricanes which positively contributed 1 percentage point to operating profit performance.