PepsiCo Delivers Solid Results for Fiscal 2009;Savory snack highlights

PepsiCo, Inc. (NYSE: PEP) today reported solid results for 2009 driven by healthy gains in its worldwide snacks and international beverage businesses, balanced investments in value and innovation in key markets and cost discipline across its operations. For the full year, reported EPS grew 17 percent to $3.77 and core constant currency EPS increased 6 percent. For the fourth quarter, reported EPS was $0.90.

PepsiCo Chairman and CEO, Indra Nooyi, said: "In 2009, strong execution of PepsiCo’s operational priorities enabled us to deliver healthy revenue and profit growth and generate strong cash flow, despite the macroeconomic challenges across much of the world. Our teams demonstrated their agility in balancing innovation and value, which enabled us to maintain consumer momentum while driving margin expansion. In addition, we continued to invest in R&D, infrastructure and innovation to sustain our long-term growth."

Following paragraphs were selected by PotatoPro to highlight the performance of Pepsico/Frito-Lay in the global savory snack market:

Nooyi continued, "In 2010, we are changing the rules of the game in North America beverages through the anticipated merger with our anchor bottlers coupled with the continuing activities to refresh our core brands. We are extending our global leadership in snacks by continuing to innovate with new products and platforms, and by accelerating our growth in developing markets. We will accelerate our commitment across all our product categories to build a more balanced and healthier portfolio of enjoyable and wholesome foods and beverages – using science-based innovation to improve our existing portfolio and create new platforms. Combined with a relentless focus on financial performance and productivity, these activities will drive sustained growth in revenue, profit and cash flow."

North America

Frito-Lay North America (FLNA) gained dollar share and was the fastest growing CPG Company in the U.S. in 2009 in measured channels. For the full year, volume increased 1 percent, net revenue grew 6 percent and core operating profit grew 7 percent, as FLNA effectively offset commodity inflation and investments in value initiatives with strong revenue management and productivity initiatives.

In the fourth quarter, volume was flat, reflecting the completion of the "20% More Free"promotion FLNA ran in the second and third quarters of the year. It continued to perform well in large format stores, growing dollar share on the strength of Lay’s potato chips, Cheetos, dips and variety packs. Net revenue increased 2 percent and core operating profit increased 4 percent in the quarter, with the muted growth reflecting the lapping of significant pricing actions in the year-ago period.

In 2010, FLNA will drive top-line growth with strong innovations on its core platforms, targeted value initiatives, and increased emphasis on delivering more nutritious snacking options to consumers, including adding fiber to its SunChips line and whole grains to Tostitos.

Latin America

In the quarter, Sabritas held its strong value share position and Gamesa grew value share.

Europe

In the quarter, snacks volume declined 3 percent, reflecting pricing actions, including weight-outs, as well as continued macroeconomic challenges. Snacks volume grew in the U.K., driven by the success of Walkers "Gazillion Bag Giveaway"and the "Do Us a Flavour"campaign, which has now been rolled out to other markets in Europe. In Russia, the division continued to gain significant value share and product innovation included a new flavor of its Hrustream bread snacks as well as the launch of Lay’s Sensations

Asia, Middle East and Africa (AMEA)

Snacks volume grew 13 percent in the quarter reflecting double-digit gains in India, Pakistan, Egypt and Thailand as well as 4 percentage points of growth from acquisitions. In the quarter, the division expanded its partnership with dairy producer Almarai to broaden its portfolio of healthy offerings in Egypt.