US: PepsiCo H1 profits drop 14%, but "on-track" for FY targets

By | 25 July 2012

  • First-half net profits drop 14% to US$2.63bn
  • Operating profits decrease by 9%
  • Sales flat at US$28.9bn in the period
  • Company on-track to hit FY targets 
PepsiCo released its H1 results today

PepsiCo released its H1 results today

PepsiCo has posted a 14% drop in first-half profits as the refranchising of its drinks business in China and Mexico impacted sales.

Operating profits fell by 9% to 4.1bn over the same period, according to H1 and Q2 results released today (25 July). Sales were flat in H1, but dropped 2% in the second quarter. Second-quarter net profits fell by 21%. 

“PepsiCo is diligently executing the strategy we set forth at the start of the year, and we remain on track to achieve our full-year targets,” said PepsiCo chairman & CEO Indra Nooyi.

Net revenue for PepsiCo's global beverages declined by 4% in the first six months of the year and dropped by 8% in Q2.

Overall net sales in emerging and developing markets decreased by 8% in Q2. PepsiCo blamed the drop on beverage refranchisings in China and Mexico and said organic sales grew by 9% in the same quarter. It also said overall net sales were affected by acquisitions and divestitures and foreign exchange translation and, on an organic basis, grew by 5%.

PepsiCo Americas Beverages saw net sales drop 3.5% in the first six months of the year compared to a year earlier while operating profit dropped 11%. In Q2, net sales fell by 5% and operating profit by 15%.

PepsiCo said it spent US$137m in the first half of the year on its deal with Tingyi, which will greatly expand its reach in China. PepsiCo announced it was to complete the tie-up with the noodles and soft drinks maker in March.

To read just-drinks' coverage of PepsiCo's H1 conference call, click here.

To find out analysts' reaction to the company's performance, click here.

To read PepsiCo's results announcement, click here.

Expert analysis

PepsiCo, Inc. - SWOT Analysis

PepsiCo, Inc. - SWOT Analysis company profile is the essential source for top-level company data and information. PepsiCo, Inc. - SWOT Analysis examines the company’s key business structure and operations, history and products, and provides summary analysis of its key revenue lines and strategy.PepsiCo (or ‘the company’) is a global consumer goods company, primarily engaged in production, marketing and sales of a variety of food, snacks and beverage products. The company manufactures, markets, and sells a variety of salty, sweet and grain-based snacks, as well as carbonated and non-carbonated beverages. The company has 22 power brands that generate over $1,000 million each in retail sales annually. PepsiCo is headquartered in New York and employs about 297,000 people. The company recorded revenues of $66,504 million during the financial year ended December 2011* (FY2011), an increase of 15% over FY2010. The operating profit of the company was $9,633 million in FY2011, an increase of 15.6% over FY2010. The net profit was $6,443 million in FY2011, an increase of 1.9% over FY2010. The company’s financial year ends on the last Saturday of December, resulting in an additional week of results every five or six years. The financial ended December 31, 2011 (FY2011) is a 53 week period whereas the financial ended December 25, 2010 (FY2010) is 52 week period. Therefore, financials for FY2011 include the impact of the extra reporting week.

Sectors: Company results, Soft drinks

Companies: PepsiCo

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