US: PepsiCo reports strong 2003
The world's second largest soft drink producer Pepsico has seen its fourth quarter earnings per share rise over 30% to 51 Cents, with full year 2003 EPS up 21% to US$2.01. Growth among the company's beverages was led by its non-carbonated portfolio, in particular Gatorade.
Chairman and chief executive officer Steve Reinemund said: "2003 was an outstanding year for PepsiCo - and 2004 looks to have the same potential. No matter how you look at our businesses, we're producing solid, balanced growth. Our health and wellness brands are growing, as are our Fun-For-You businesses. We've achieved solid growth rates in snacks and beverages, both in our North American and in our International operations. Overall, our top-line and bottom-line growth rates are strong, as are our short-term and long-term growth prospects."
Volume continued to be solid, with total servings of products sold worldwide up 6% in the fourth quarter of 2003 and 5% for the full year. Servings of snacks worldwide grew 5% for the quarter and for the full year, while worldwide servings of beverages grew 7% for the quarter, and over 5% for the full year.
Total operating profit increased 2% for the quarter, and nearly 11% for the full year. Total net income, which also includes the favorable tax settlement in the fourth quarter, increased 30% for the quarter, and over 18% for the full year.
Pepsi Beverages North America's growth in the fourth quarter wasled by its portfolio of non-carbonated beverages, with a strong 11% gain. This included strong double-digit growth in Gatorade, as a result of off-season distribution gains in the mass merch, club and vending channels. There was also Continued double-digit growth in Aquafina.
For full-year 2003, PBNA volume growth was 3%, with non-carbonated drinks growing 8% and CSDs growing 1.5%. Gatorade, Aquafina, and Propel were the drivers of non-carbonated growth, while the national launch of Sierra Mist and strong diet portfolio performance contributed to CSD gains. Full-year revenue increased 7%, reflecting the volume growth, net pricing, and a mix shift toward full goods
International beverage bottler case sales up 9%, with growth in virtually all the major markets, PepsiCo said. China, Russia, the Middle East region, UK and Australia were all major contributors to growth.
In addition, CSD volume growth resumed in both Mexico and Venezuela, countries that have been challenged by macroeconomic conditions. These gains were partially offset by lower volume in Germany, due to the "one-way deposit" imposed by the German government.
Reinemund said: "The strong 2003 performance sets the stage for a repeat performance in 2004 and beyond. Our pipeline of innovation remains strong, our operating plans are solid, and we're making great progress in developing our people. PepsiCo continues to perform as a premier consumer products company, with a diverse product portfolio, powerful distribution systems, and a deep understanding of both the consumer and retail customer. I expect all our businesses will leverage these competitive advantages to deliver their 2004 plans."
Reinemund continued: "Our outlook for 2004 remains entirely consistent with the guidance that we provided in our December investor meeting. We are targeting 2004 EPS in the $2.24 to $2.28 range, and we expect our operating cash flow, after net capital expenditures, to exceed 10% growth."
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