PepsiCo Announces Strategic Growth Investments
PepsiCo announces a series of strategic investment and productivity initiatives to deliver top-tier, sustainable long-term growth for its shareholders. These decisions are based on a comprehensive review by the company's management of its portfolio, brands, costs, organization and capital structure. As a result of its review, the company reaffirmed its commitment to an integrated food and beverage portfolio through a one-company platform.
The company plans to increase advertising and marketing support behind its global brands by $500 to $600 million in 2012, with particular focus on North America; going forward, it expects to maintain or increase that rate of support as a percentage of revenues.
Its multi-year productivity program is expected to generate $1.5 billion of incremental cost savings by 2014 through the optimization of operating practices and organization structure, including a reduction in force of about 8,700 employees -- about 3 percent of its global workforce.
The company targets high-single-digit core constant currency EPS growth for 2013 and beyond after a transition year in 2012, in which it expects core constant currency EPS to decrease by 5 percent. PepsiCo also announces its plan to increase returns to shareholders in the form of higher dividends and share repurchases in 2012.
"In a volatile global environment over the past five years, PepsiCo has delivered double-digit compound annual growth in core net revenue, 8 percent compound annual growth in core EPS, and returned about $30 billion to shareholders in the form of dividends and share repurchases," says PepsiCo Chairman and CEO Indra Nooyi. "Our goal is to continue on that earnings trajectory over the next 5 to 10 years, fully recognizing that we need to make changes in how we operate to address the challenges we identified in the review process. 2012 will be a transition year, in which we will be taking the appropriate steps to build a stronger, more successful company going forward."