PepsiCo Reported 5% Drop in 4Q Earnings

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PepsiCo Inc. posted a 5% decline in 4Q earnings despite growth in sales at its domestic business.


Pepsi, the world’s second largest food and beverage business based on net revenue, earned $1.37 billion, or 85 cents a share, down compared with $1.43 billion, or 90 cents a share one year ago while revenue rose 37% to $18.16 billion. Quaker Foods North America segment’s volume dropped 1%.


Pepsi\'s beverage volume added 14% in the Americas.


Per-share earnings grew to 8% from 7%, which fell short of its expectation. The management has pursued growth by acquiring two large bottling operations and making expansion in emerging markets.


The earnings report came before its issuance of weak outlook for the upcoming year. The high commodity cost inflation is believed to be tough to pass along to consumers. In addition, it becomes harder to raise prices amid high unemployment and low consumer confidence.


On Wednesday, its rival beverage giant Coca-Cola Co. posted an increase in 4Q earnings. The increase was driven by sales growth in North America and the acquisition of its North American bottling operations. The world’s largest soft drink maker garnered $5.77 billion, or $2.46 per share for the last three months of 2010, compared from $1.54 billion, or 66 cents per share in the prior year.


Both soft-drink makers have been attempting to reinvigorate their soft-drink businesses at homes but still keeping an eye on international markets. Marketing and new products receive their most attention.


Coke acquired Coca-Cola Enterprises Inc.\'s North American bottling operations while Pepsi bought the two largest bottlers of its products, Pepsi Bottling Group Inc. and PepsiAmericas Inc., for $7.8 billion. The acquisition resulted in the formation of a new wholly-owned subsidiary of PepsiCo, Pepsi Beverages Company. In late 2010, PepsiCo purchased a majority stake in Wimm-Bill-Dann Foods, making its largest international acquisition.

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Economics is the study of our lives,our jobs, our homes, our families and the little decisions we face every day. Thus, I am keen on reading and studying economic issues.

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PepsiCo Reported 5% Drop in 4Q Earnings

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This article was published on 2011/02/11