PepsiCo First Quarter 2012 Earnings Call April 26, 2012

Transcription

1 PepsiCo First Quarter 2012 Earnings Call April 26, 2012 Indra Nooyi Chairman and Chief Executive Officer Hugh Johnston Chief Financial Officer

2 Safe Harbor Statement of Terms & Non-GAAP Information Safe Harbor Statement Statements in this communication that are "forward-looking statements, including PepsiCo s 2012 guidance are based on currently available information, operating plans and projections about future events and trends. Terminology such as believe, expect, intend, estimate, project, anticipate, will or similar statements or variations of such terms are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forwardlooking statements. Such risks and uncertainties include, but are not limited to: changes in demand for PepsiCo s products, as a result of changes in consumer preferences and tastes or otherwise; PepsiCo s ability to compete effectively; unfavorable economic conditions in the countries in which PepsiCo operates; damage to PepsiCo s reputation; PepsiCo s ability to grow its business in developing and emerging markets or unstable political conditions, civil unrest or other developments and risks in the countries where PepsiCo operates; trade consolidation or the loss of any key customer; changes in the legal and regulatory environment; PepsiCo s ability to build and sustain proper information technology infrastructure, successfully implement its ongoing business transformation initiative or outsource certain functions effectively; fluctuations in foreign exchange rates; increased costs, disruption of supply or shortages of raw materials and other supplies; disruption of PepsiCo s supply chain; climate change, or legal, regulatory or market measures to address climate change; PepsiCo s ability to hire or retain key employees or a highly skilled and diverse workforce; failure to successfully renew collective bargaining agreements or strikes or work stoppages; failure to successfully complete or integrate acquisitions and joint ventures into PepsiCo s existing operations; failure to successfully implement PepsiCo s global operating model; failure to realize anticipated benefits from our productivity plan; any downgrade of our credit ratings; and any infringement of or challenge to PepsiCo s intellectual property rights. For additional information on these and other factors that could cause PepsiCo s actual results to materially differ from those set forth herein, please see PepsiCo s filings with the SEC, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Non-GAAP Information Please refer to the Investors section of PepsiCo s web site at under the heading Investor Presentations to find disclosure and a reconciliation of any non-gaap financial measures contained herein. 2

3 PepsiCo First Quarter 2012 Earnings Call Indra Nooyi Chairman and Chief Executive Officer

4 Q1 Results In-Line with Expectations Consumer Behavior, Competitive Landscape, and Commodities In-line With Expectations Achieved Pricing Across Businesses Good Progress on Brand Building, Innovation, Execution and Productivity Initiatives 4

5 Q1 Financial Highlights Net Revenue Reflected Strong Price/Mix Across Businesses Global Price/Mix was +5.5% Grew Global Snacks, Global Beverage and Global Nutrition Revenues Strong Emerging Market Constant Currency Revenue Growth, Up 13% 1 1. Represents a Non-GAAP financial measure that excludes certain items. For a description of these items, please refer to Reconciliation of GAAP and Non-GAAP Information in the Investors section of PepsiCo s website at 5

6 Five Focus Areas Brand Building Innovation Execution Productivity Driving Cash Returns

7 Brand Building Expect to Increase Our Investment in Advertising and Marketing From 5.2% to 5.7% of Net Revenue in 2012 Focusing on 12 Global Mega Brands Shifting Spending to Working From Non-Working Reducing Numbers of Agency Partners Expect to See Brand Equity Scores Strengthen Over the Course of the Year Investments Should Begin to Translate Into Incremental Top-line Benefits Later this Year and Into

8 Innovation Results Encouraging 8

9 Pepsi Next Off to a Good Start Results Ahead of Launch Expectations Brand is Sourcing Volume From Other Categories 90%+ ACV Distribution in GDMx in 3 Weeks Achieved ~1 Pt. Value Share Source: IRI 9

10 Good Progress in Packaging Innovation Mtn. Dew 24oz Can Focused on Heavy DEW Customers With Positive Test Results Brisk Tea Gallon Jug ~2.5 Pts. of Volume Share of Grocery RTD Tea in First 12 Weeks Source: IRI 10

11 Accelerating Premium Innovation Quaker Real Medleys Premium Single Serve Cup of Hearty Rolled Oats & Whole Grains With Chunks of Real Fruits and Nuts Stacy s Pita Crisps to Attract New Consumers, New Flavors to Refresh 11

12 Increasing Focus on Value Innovation Lay s Stax Gained 2 Pts. of Value Share 1 in Q1, Upcoming Launch of Hispanic Inspired Flavors Taqueros Del Sur Indulgent Tortilla Chip for Meal Occasions 1. Based on IRI for Stacked Potato Chip Category 12

13 Accelerating Lift & Shift Efforts Do Us A Flavour Quaker Saudi Arabia & UAE Holland 13

14 Leveraging Big Brands Into New Product Platforms Doritos Jacked Ultimate Extreme Snacks Doritos Dinamita Taquito-Shaped Doritos with Explosive Flavor Doritos Locos Tacos Partnerships in Other Channels 14

15 Driving Execution New Account Wins #1 Contributor to C-Store Revenue Growth in the US Wimm-Bill-Dann Synergies Ahead of Schedule 15

16 Making Good Progress on Productivity Expect ~$1 Billion in Productivity in 2012 and $3 Billion in Total Over the Next 3 Years Increasing Automation in Our Plants Implementing GES at Frito-Lay Leveraging Global Capability & Know-How 16

17 Focused on Driving Higher ROIC and Cash Returns to Shareholders Reducing Net Capex as % of Sales Returned Almost $1 Billion to Shareholders in Q1 and Expect to Return More Than $6 Billion for the Full Year

18 Successfully Closed Tingyi Transaction Combination Creates the #1 LRB Manufacturing Network in China Improves Operating Efficiency Through Combining Expertise In Manufacturing and Distribution Supports New Opportunities to Develop Local Economies in Interior and Western China Provides Better Customer Service Through Tingyi s Superior Distribution Expertise and Network 18

19 PepsiCo First Quarter 2012 Earnings Call Hugh Johnston Chief Financial Officer

20 Q1 Results Reported Net Revenue Up 4%, With Constant Currency Net Revenue Up 5% 1 Achieved 5.5 Points of Effective Net Pricing Globally Gross Margins Impacted by Commodity Inflation Operating Margins Reflect SG&A Productivity Offsetting a Substantial Portion of Commodity Inflation 1. Represents a Non-GAAP financial measure that excludes certain items. For a description of these items, please refer to Reconciliation of GAAP and Non-GAAP Information in the Investors section of PepsiCo s website at 20

21 As Expected, Below the Line Deleverage in Q1 Core Corporate Unallocated Increased in the Quarter Higher Net Interest Expense of $12 Million Year Over Year Driven by Higher Average Net Debt and Slightly Higher Interest Rates Core Effective Tax Rate Of 26.7%, 70 Basis Points Increase Year Over Year Drove 5 Points of Deleverage Below the Line Note: Certain of the above represent Non-GAAP financial measures that exclude certain items. For a description of these items, please refer to Reconciliation of GAAP and Non-GAAP Information in the Investors section of PepsiCo s website at 21

22 2012 Guidance Core Constant Currency EPS Growth Commodity Inflation 2012 Productivity A&M % of Sales YoY Increase Corporate Unallocated Expense Net Interest Expense Core Tax Rate Foreign Exchange Impact on Core EPS ~(5)% 1 ~$1.5B ~$1B, $500MM Incremental 50 Basis Points Increase Increase ~27% ~(2)% 2 1. From PepsiCo s fiscal 2011 core EPS of $ Based on current forex market consensus Note: Certain of the above represent Non-GAAP financial measures that exclude certain items. For a description of these items, please refer to Reconciliation of GAAP and Non-GAAP Information in the Investors section of PepsiCo s website at 22

23 Structural Changes Impacting 2012 Reported Revenue Mexico Beverage Refranchising Q Change IDJ Joint Venture Q Tingyi Alliance Q

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