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PepsiCo bubbles up with 4% growth in Q4, to cut over 8,000 jobs

Last updated: 07:02 09 Feb 2012 EST, First published: 08:02 09 Feb 2012 EST

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Snacks and soft drinks giant PepsiCo (NYSE:PEP) Thursday posted 4% growth in fourth-quarter earnings as it said it would shedding over 8,000 jobs, 3 percent of its workforce, by 2014.

For the quarter ended December 31, PepsiCo profits came in at $1.42 billion, or 89 cents per share, from $1.37 billion, or 85 cents per share a year earlier.

Adjusted earnings in the latest quarter totaled $1.15, while revenue rose 11 percent to $20.2 billion.

Analysts estimated earnings of $1.13 a share and revenue of $19.89 billion.

PepsiCo chairman and chief executive Indra Nooyi said: "In 2011, we delivered solid top-and bottom-line growth.

"We continued to stimulate strong consumer demand for our products, and our successful pricing and productivity programs partially offset the impacts of inflation. Importantly, in a year characterized by a challenging macroeconomic environment and political turbulence, we took advantage of gains from strategic adjustments to our portfolio to reinvest in key capabilities and markets.

"PepsiCo has great brands and strong brand-building capabilities, innovative products and tremendous global reach, advantages we will continue to build upon. These strengths, coupled with strategic initiatives we separately announced today, will improve our ability to drive growth and generate shareholder value in the years ahead."

The company said it will cut 8,700 jobs by 2014 in order to generate $1.5 billion in savings.

PepsiCo's fourth-quarter snacks volume increased 15 percent and beverage volume grew 3 percent, led by strong performance in key emerging markets.

In the fourth quarter, snacks volume grew by double digits in China, India and the Middle East. Beverage volume growth was driven by double-digit gains in India, Saudi Arabia and Vietnam.

China beverage volume growth was impacted by the introduction of a consumer-preferred value package in the third quarter, which drove strong unit growth and a double-digit net revenue increase but adversely impacted reported volume growth.

Snack and soda makers are facing high commodity costs and changing consumer tastes toward healthier snacks and drinks.

Pepsi's rival Coca-Cola Co. (NYSE:KO) announced its own cost-cutting program on Tuesday, although Coca-Cola said it would ultimately add jobs in its program.

Pepsi said "tough decisions" were needed because it expects 2012 will be the second year in a row with higher-than-average costs for commodities. It said it is not able to offset those with higher prices because of consumer caution in light of the uncertain economy, so the cost-cutting plan is needed.

For full-year 2011, net income rose 2 percent to $6.46 billion, or $4.03 per share. That compares with $6.33 billion, or $3.91 per share.

Revenue rose 15 percent to $66.5 billion from $57.84 billion.

For 2012, PepsiCo sees 2012 earnings falling by 5 percent from $4.40 per share in 2011. Wall Street analysts expect 2012 earnings of $4.53 per share for PepsiCo, according to a FactSet Research survey.

The company will boost its annual dividend by 4 percent to $2.15 a share and buy back at least $3 billion in stock in 2012.
It will also boost its marketing spend by up to $600 million this year.

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