PepsiCo to cut 8,700 jobs, invest in brands

Thu Feb 9, 2012 7:39pm IST

1 of 2. Cases of Pepsi are displayed for sale in Carlsbad, California February 7, 2012. PepsiCo Inc. will report their earnings February 9.

Credit: Reuters/Mike Blake/Files

Related Topics

Stocks

   

REUTERS - PepsiCo Inc (PEP.N) expects to cut 8,700 jobs as part of a plan to save an extra $1.5 billion over the next three years, as it invests more money in marketing and advertising its brands.

Its shares fell 2.1 percent to $65.30 in premarket trading from Wednesday's close of $66.74 on the New York Stock exchange.

PepsiCo, maker of Sierra Mist soda, Tropicana juice and Gatorade sports drinks, also reported a better-than-expected fourth-quarter profit and forecast a 5 percent decline in 2012 earnings.

The moves come as CEO Indra Nooyi tries to reinvigorate Pepsi's U.S. beverage business, which has lost market share to archrival Coca-Cola Co (KO.N). Nooyi has been criticized for taking her eye off the core business of sodas and salty snacks like Fritos and Doritos chips to expand into healthier options such as hummus and drinkable oatmeal.

She defended her choices at a meeting with investors on Thursday. "It's an 'and' game, not an 'or' game," Nooyi told investors.

The marketing investment will be focused on 12 brands, including Pepsi-Cola, Lay's, Gatorade, Tropicana, 7-UP and Doritos.

The 2012 earnings forecast, coupled with an expected hit from currency rates, would mean a bigger step back in earnings from 2011 than expected, Jim Tierney, chief investment officer at W.P. Stewart, said. "But this will take time and we have three to four quarters before we know if it is working."

"The positive is they are doing something. More ad spending is a positive and costs cuts are encouraging," he said.

The company said it would increase advertising and marketing spending by $500 million to $600 million.

For 2013, PepsiCo expects earnings to grow at a high single-digit rate.

The job cuts, which represent about 3 percent of PepsiCo's payroll, will occur in 30 countries, PepsiCo said.

The $1.5 billion in extra savings is in addition to $1.5 billion it already planned to save over that period.

PepsiCo also said that Massimo D'Amore, president of its Global Beverages Group, would retire at the end of February.

The company reported a fourth-quarter profit of $1.42 billion, or 89 cents per share, up from $1.37 billion, or 85 cents per share, a year earlier.

Excluding items, PepsiCo earned $1.15 per share, topping analysts' average estimate of $1.13 per share, according to Thomson Reuters I/B/E/S. Revenue rose 11 percent to $20.2 billion.

(Reporting by Martinne Geller in New York; Editing by Dave Zimmerman and Maureen Bavdek)

FILED UNDER:

Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage