PepsiCo was never going to win many prizes for its first-quarter showing, but management is keen to show that its mammoth restructuring plan is a case of 'so far, so good'.

For all the bluster about saving US$3bn over three years, beginning this year, we still have precious little detail about what PepsiCo is actually cutting. Yes, the plan is to scrap 8,700 jobs worldwide, and the axe will fall sharpest on its North American soft drinks operations. Yet, what exactly is being cast adrift, and from where? 

Analysts probed the soft drinks giant on its first-quarter results conference call yesterday (27 April), but success was limited. One thing we do know is that PepsiCo has chopped the number of marketing agencies it works with in North American beverages, from 150 in 2011 to 50 currently. Presumably, those still standing are getting more money to promote key brands: The group's total US marketing spend was up by 25% versus the same quarter of last year.

Given that PepsiCo has billed 2011 as effectively a sabbatical from its perennial arm-wrestle with The Coca-Cola Co, much of our analytical focus regarding its performance must be on the firm's moves to rewire its business. 

Watch this space for financial benefits. PepsiCo's CEO, Indra Nooyi, said: “Because most of the restructuring actions began in mid-Q1, the financial benefits of the restructuring will accelerate in Q2 and as we move through the year.”

Year-to-date, PepsiCo's share price is broadly flat, up by around 2% since January. Following yesterday's results, it barely moved. Investors, it seems, are reserving judgement. This looks entirely sensible to me. Sanford Bernstein analysts summed up the mood pretty well in a note headed: “Generally in-line Q1 results with some signs of progress... or at least hope.”

For the three months to the end of March, PepsiCo's net profits dipped by 1%, to $1.13bn, although markets outside of Western Europe and North America drove group net sales to a 4% increase, to $12.43bn.

Emerging markets are creating breathing space for PepsiCo. Nooyi, herself under pressure, showed obvious delight at shifting the conference call focus from North America to China, Middle East and Africa. “Great question,” she proffered to the analyst who prompted it.

Political turmoil in the Middle East hasn't greatly affected the region's thirst for soft drinks, she said. Meanwhile, Russia is looking good for long-term economic growth, based on its bulging oil reserves.

However, special hope is reserved for PepsiCo's recently-approved tie-up with soft drinks and noodle maker Tingyi Holding Corp in China. Nooyi reiterated that the deal will “significantly accelerate the national distribution of PepsiCo's brands in a capital-efficient way, using Tingyi's extensive manufacturing and distribution network”. She reminded analysts that China, despite relative economic slowdown in the last few months, remains “the second largest and one of the fastest-growing beverage markets in the world”. 

Looking ahead, PepsiCo has not changed its view that underlying profits will shrink by 5% in 2011, versus 2010. There are also unanswered questions about where cuts are being made. While management confidence is a positive, it's still a case of 'wait and see'. At least things do not seem to be getting much worse.

Conference call quotes are taken from a transcript supplied by Seeking Alpha.