PepsiCo on the grow

PepsiCo Inc. Chairman and CEO Indra Nooyi said the Purchase-based company is “changing the rules of the game in North America beverages” in 2010 with its merger with Somers-based Pepsi Bottling Group Inc. and its other anchor bottler as well as its continuing efforts to refresh its core brands.

PepsiCo expects to close its approximately $7.8 billion acquisition of PBG and PepsiAmericas Inc. by the end of this month, creating one of the largest food and beverage companies globally. For the fourth quarter of 2009, PepsiCo reported net revenue of approximately $13.3 billion for its domestic and global food and beverage operations, up 4.5 percent from the fourth quarter of 2008. Its fourth-quarter earnings per share was 90 cents in 2009, a 99 percent increase from the previous year.

The company ended 2009 with net revenue of approximately $43.2 billion, down $19 million from 2008. The company”™s earnings per share for 2009 was $3.77, up 17 percent from a $3.21 EPS in 2008.

The company reported a total fourth-quarter operating profit of approximately $2 billion in 2009, a 67 percent increase from the fourth quarter of 2008. For the year, the company”™s total operating profit was about $8 billion in 2009, up 16 percent from 2008.
PepsiCo”™s full-year cash flow from operating activities was $6.8 billion, including a discretionary $1 billion contribution to PepsiCo”™s pension fund, $196 million of cash payments for its Productivity for Growth program and $49 million of payments related to the pending merger with its bottlers. Management operating cash flow was $5.6 billion, well ahead of the company”™s forecast.

Assuming PepsiCo will complete its deals for its anchor bottlers by the end of this month, the company is targeting an 11 percent to 13 percent growth rate from its core EPS of $3.71 in 2009. The company is targeting pre-tax annual synergies of about $400 million from its bottling acquisitions when fully implemented by 2012, with one-time costs of about the same amount. In 2010, synergies from the bottling deals are expected to total from $125 million to $150 million.

PepsiCo officials said the company is still in the process of completing its plans to integrate the bottling operations. Details on those and other cost-efficient measures relating to the company”™s beverage business will be discussed at its analyst meeting scheduled for March 22-23.