Pepsi 2007 Annual Report Download - page 52

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Frito-Lay North America
% Change
2007 2006 2005 2007 2006
Net revenue $11,586 $10,844 $10,322 7 5
Operating profit $2,845 $2,615 $2,529 9 3
2007
Net revenue grew 7% refl ecting volume
growth of 3% and positive effective net
pricing due to pricing actions and favor-
able mix. Pound volume grew primarily
due to high-single-digit growth in trade-
mark Doritos and double-digit growth
in dips, SunChips and multipack. These
volume gains were partially offset by a
mid-single-digit decline in trademark Lay’s.
Operating profi t grew 9% primarily
refl ecting the net revenue growth, as well
as a favorable casualty insurance actuarial
adjustment refl ecting improved safety
performance. This growth was partially
offset by higher commodity costs, as well
as increased advertising and marketing
expenses. Operating profi t benefi ted
almost 2 percentage points from the
impact of lower restructuring and impair-
ment charges in the current year related
to the continued consolidation of the
manufacturing network.
Smart Spot eligible products rep-
resented approximately 16% of net
revenue. These products experienced
double-digit revenue growth, while the
balance of the portfolio had mid-single-
digit revenue growth.
2006
Net revenue grew 5% refl ecting volume
growth of 1% and positive effective net
pricing due to salty snack pricing actions
and favorable mix. Pound volume grew
primarily due to double-digit growth
in SunChips, Multipack and Quaker
Rice Cakes. These volume
gains were partially offset by
low-single-digit declines in
trademark Lay’s and Doritos.
The Stacy’s Pita Chip Company
acquisition contributed
approximately 0.5 percentage points to
both revenue and volume growth. The
absence of the prior year’s additional
week reduced volume and net revenue
growth by 2 percentage points.
Operating profi t grew 3% refl ecting
the net revenue growth. This growth
was partially offset by higher commodity
costs, primarily cooking oil and energy.
Operating profi t was also negatively
impacted by almost 3 percentage points
as a result of a fourth quarter charge for
the consolidation of the manufacturing
network, including the closure of two
plants and rationalization of other manu-
facturing assets. The absence of the prior
year’s additional week, which reduced
operating profi t growth by 2 percentage
points, was largely offset by the impact of
restructuring charges in the prior year to
reduce costs in our operations, principally
through headcount reductions.
Smart Spot eligible products rep-
resented approximately 15% of net
revenue. These products experienced
double-digit revenue growth, while the
balance of the portfolio had low-single-
digit revenue growth.
FLNA’s Smart Spot eligible products
experienced double-digit revenue growth in
both 2007 and 2006.
In 2007, FLNA volume grew
primarily due to high-single-digit
growth in trademark Doritos
and double-digit growth in dips,
SunChips and multipack.
50