PepsiCo, Inc. · NASDAQ:PEP
PepsiCo — UBS Global Consumer Conference / BoA Merrill Lynch Conference 2010
28 slides from PepsiCo's conference presentation, Sep 9, 2010
Slide 1: Dylan Haverty-Stacke, Director, Investor Relations, PepsiCo
Dylan Haverty-Stacke Director, Investor Relations PepsiCo 1
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Statements in this communication that are “forward-looking statements”, including any statements regarding the business outlook of PepsiCo and its divisions, are based on currently available information, operating plans and projections about future events and trends. They inher
Slide 3: The Promise of PepsiCo
The Promise of PepsiCo • Portfolio of leading snack and beverage brands • Large-scale reach in both developed and emerging markets • Businesses led by experienced teams that understand local markets • Localized supply chains, advantaged go-to-market systems and increasing scale in key markets • Stro
Slide 4: Food & Beverage powerhouse
Food & Beverage powerhouse 2009 global F&B revenue ($B) 2009 est. N.A. F&B revenue ($B) 97 N 97 35 P 57 57 32 K 48 48 25 CC 41* 41 19* AB 37 37 15 U 29 29 13 D 22 21 10 DIAGEO GM 15 15 9 DIAGEO D 15 15 7 13 6 S 13 * Accounting for Coca Cola’s pending acquisition of CCE’s NA business Note: PepsiCo re
Slide 5: We operate in large and vibrant categories
We operate in large and vibrant categories Global Macrosnacks Global Beverages Volume growth (M tons) Volume growth (MM liters) 6% 6% 4% 4% 4% 5% 3% 3% 3% 3% 3% 3% 3% 3% 3% 2% '05 '06 '07 '08 '09 '10E '11E '12E '05 '06 '07 '08 '09 '10E '11E '12E Retail sales Retail sales ($B) ($B) $141 $211 $319 $48
Slide 6: ... with considerable headroom to grow
. . . with considerable headroom to grow Savory per caps (kilos) LRB per caps (8 oz) 9.1 1,405 3.2 828 0.4 187 US Developed Emerging US Developed Emerging Pop: 0.3B 0.9B 5.5B Pop: 0.3B 0.9B 5.5B PEP net rev. per caps ~$100 ~30x $3.5 US / Canada International Pop: 0.3B 6.4B Source: Euromonitor / Cana
Slide 7: Our new portfolio is well balanced and highly focused
Our new portfolio is well balanced and highly focused . . . Food and Beverage North America and net revenue International net revenue US and Canada Snacks/ $35B Foods $27B 61% 48% 39% 52% Int’l $22B Bev. $30B Based on 2009 pro forma results reflecting the bottling merger. 7
Slide 8: ... And advantaged for growth
… And advantaged for growth Snacks Beverage Volume Volume Developed Developed 63% 56% 44% 37% Emerging Emerging Revenue Revenue Developed Developed $19B $23B 69% 76% 31% 24% Emerging Emerging $8B $7B Based on 2009 pro forma results reflecting the bottling merger. 8
Slide 9: Scale operating businesses in emerging markets around the world
Scale operating businesses in emerging markets around the world Snacks Beverages Russia China > $1B Mexico Brazil Mexico Russia China Turkey India Turkey India Poland Vietnam > $0.2B Poland Saudi Arabia Romania Egypt Colombia Egypt Ukraine Chile South Africa Based on 2009 pro forma results reflectin
Slide 10: Incredible reach
Incredible reach Operate over Over 10 million ~$300MM retail 100K routes outlets served sales each day 10
Slide 11: Highly integrated system
Highly integrated system % of system revenue Total operating control ~85% ~15% Franchised Note: 2009 pro forma revenue reflecting bottler merger 11
Slide 12: Large muscular brands
Large muscular brands 19 $1B+ brands $250MM - $1B brands (examples) 12
Slide 13: Stellar financial performance
Stellar financial performance 10-year performance CAGR 5-year performance CAGR (’99 – ’09) (’04 – ’09) 12%* 10%* 8%* 8% 7% 7%* Net Core Div Core Net Core Div Core Revenue Op Inc EPS Revenue Op Inc EPS *Core results are Non-GAAP financial measures that exclude certain items. Please refer to the "Peps
Slide 14: In 2009 we performed well in a challenging environment
In 2009 we performed well in a challenging environment ’09 Performance • Global slow-down, pressured consumer Volume flat • NAB category challenges • Commodity inflation Net Revenue* 5 • Inability to do share repo’s and bottler Division Operating share sales depressed EPS growth by 6 2 - 3pts Income
Slide 15: Q2 Highlights
Q2 Highlights • Broad-based growth across global snacks and beverage portfolio • Bottler integration on track – largely completed integration of PBG and PAS in Mexico and Europe in the quarter • Made incremental investments in strategic initiatives • Management operating cash flow, excluding certain
Slide 16: Q2 Results – Core Constant Currency
Q2 Results – Core Constant Currency % Growth Year Over Year • Constant currency net revenue grew 37%* Q2’10 37 * • Core constant currency EPS grew 7%* to $1.09 26* • Strong results driven by: 11 – Acquisition of bottlers 7* 1 – Broad-based gains across snacks and beverages in Snacks Bevs Revenue Div
Slide 17: 7 Strategic Imperatives
7 Strategic Imperatives 1 Build and extend our Macrosnacks portfolio 2 Sustainably and profitably grow beverages worldwide 3 Build and expand our Nutrition businesses 4 Leverage the power of Power of One 5 Deliver on our Environmental Sustainability commitments 6 Build/refresh organization capabilit
Slide 18: Build and extend our Macrosnack portfolio
1 Build and extend our Macrosnack portfolio • Grow the core and add adjacencies in existing markets while rapidly expand into new geographies • Incorporate local tastes and heritage into our products • Engineer layers of advantage into the business • Do not lose share to local competitors • Aggressi
Slide 19: Sustainably and profitably grow beverages worldwide
2 Sustainably and profitably grow beverages worldwide • Restore North American Beverages to sustainable, profitable growth • Invest aggressively in emerging markets to get to leadership/parity • Develop innovative zero calorie beverages – Step-up innovation in natural sweetener research and formulat
Slide 20: Build and expand our Nutrition business
3 Build and expand our Nutrition business PepsiCo net revenue mix Large and profitable Nutrition business today Fun-for-you/ Fun-for-you/ Better-for-you Better-for-you 2009 snacks and Beverages foods Estimated ~38% Size ~$10B ~44% Profitability Mid-teens Top-line annual ~10% growth (last 3 years) ~1
Slide 21: Leverage the Power of 'Power of One'
4 Leverage the Power of ‘Power of One’ Four ways to realize this ‘Power’ • Across beverages • Across PepsiCo • Across PepsiCo and customers • Across PepsiCo and partners Benefits • Grow top line • Improve service levels to customers • Reduce costs 21
Slide 22: Deliver on our Environmental Sustainability commitments
5 Deliver on our Environmental Sustainability commitments Water • Improve our water use efficiency by 20 percent per unit of production by 2015 • Strive for positive water balance in our operations in water-distressed areas Land • Reduce packaging weight by 350 million pounds – avoiding the creation
Slide 23: Build/refresh organization capabilities for the new environment
6 Build/refresh organization capabilities for the new environment • Accelerate top-line growth – Innovation capabilities – Consumer engagement – Brand equity – Research and development • Create efficient middle • Attract, retain and develop our people 23
Slide 24: Productivity across the value chain
Productivity across the value chain Net revenues Continuous improvement 100% Transformational initiatives Profit ~20% Power of One/SAP key enablers A&M ~5% Commodities ~30% Manufacturing 3% = Supply Chain Compressible Costs ~45% $800MM/yr Sales G&A/Other 24
Slide 25: Responsible Financial Management
7 Responsible Financial Management 2011-2012 profit algorithm core constant currency Macrosnacks powerhouse North America Mid-single- Net Revenue digit International High-single- Net Revenue digit Steady domestic beverages Division High-single- Operating Income digit Synergies ~ 1pt Strong int’l mar
Slide 26: Capital structure/return to shareholders
7 Capital structure/return to shareholders Maintain appropriate financial flexibility with Objective ready access to global capital and credit markets at favorable interest rates Core Returns to No impact on Management shareholders share buy- Operating Cash in the form backs from Flow expected to of
Slide 27: The PepsiCo Advantage
The PepsiCo Advantage • Portfolio of leading snack and beverage brands with large-scale reach into both developed and emerging markets • Localized supply chains, advantaged go-to-market systems and increasing scale in key markets • Businesses led by experienced teams that understand local markets an
Slide 28: The Promise of PepsiCo
PepsiCo — UBS Global Consumer Conference / BoA Merrill Lynch Conference 2010 on 6ix