Pepsi 2010 Annual Report Download - page 67

Management’s Discussion and Analysis
66 PepsiCo, Inc. 2010 Annual Report
Quaker Foods North America
% Change
2010 2009 2008 2010 2009
Net revenue
$1,832 $1,884 $1,902 (3) (1)
Impact of foreign currency translation (1) 1
Net revenue growth, on a constant currency basis* (4) –
Operating prot
$ 568 $ 628 $ 582 (10) 8
Restructuring and impairment charges – 1 31
Operating prot, excluding above item* $ 568 $ 629 $ 613 (10) 3
Impact of foreign currency translation
(1) –
Operating prot growth excluding above item, on a constant currency basis* (10)** 3
* See “Non-GAAP Measures”
** Does not sum due to rounding
2010
Net revenue declined 3% and volume declined 1%. The volume
decline primarily reflects low-single-digit declines in Oatmeal
and ready-to-eat cereals. Unfavorable mix and net pricing
also contributed to the net revenue decline. Favorable foreign
currency positively contributed 1percentage point to the net
revenue performance.
Operating profit declined 10%, primarily reflecting the net
revenue performance, as well as insurance settlement recover-
ies recorded in the prior year related to the Cedar Rapids flood,
which negatively impacted operating profit performance by
3percentage points.
2009
Net revenue declined 1% and volume was flat. Low-single-digit
volume declines in Oatmeal and high-single-digit declines in
trademark Roni were oset by high-single-digit growth in ready-
to-eat cereals. Favorable net pricing, driven by price increases
taken in 2008, was oset by unfavorable mix. Unfavorable for-
eign currency reduced net revenue growth by 1percentage point.
Operating profit increased 8%, primarily reflecting the
absence of 2008 restructuring and impairment charges related
to our Productivity for Growth program, which increased operat-
ing profit growth by 5percentage points. Lower advertising and
marketing, and selling and distribution expenses, also contrib-
uted to the operating profit growth.
Latin America Foods
% Change
2010 2009 2008 2010 2009
Net revenue $6,315 $5,703 $5,895 11 (3)
Impact of foreign currency translation (1) 14
Net revenue growth, on a constant currency basis* 10 10**
Operating prot $1,004 $ 904 $ 897 11 1
Restructuring and impairment charges – 3 40
Operating prot excluding above item* $1,004 $ 907 $ 937 11 (3)
Impact of foreign currency translation – 17
Operating prot growth excluding above item, on a constant currency basis* 11 13**
* See “Non-GAAP Measures”
** Does not sum due to rounding
2010
Volume increased 4%, reflecting mid-single-digit increases at
Sabritas in Mexico and Brazil. Additionally, Gamesa in Mexico
grew at a low-single-digit rate.
Net revenue increased 11%, primarily reflecting favorable
eective net pricing and the volume growth. Net revenue growth
reflected 1percentage point of favorable foreign currency,
which was net of a 6-percentage-point unfavorable impact
fromVenezuela.
Operating profit grew 11%, primarily reflecting the net rev-
enue growth. Unfavorable foreign currency reduced operating
profit growth slightly, as an 8-percentage-point unfavorable
impact from Venezuela was oset by favorable foreign currency
in other markets.
2009
Volume declined 2%, largely reflecting pricing actions to cover
commodity inflation. A mid-single-digit decline at Sabritas in
Mexico and a low-single-digit decline at Gamesa in Mexico were
partially oset by mid-single-digit growth in Brazil.
Net revenue declined 3%, primarily reflecting an unfavorable
foreign currency impact of 14percentage points. Favorable
eective net pricing was partially oset by the volume declines.
Operating profit grew 1%, reflecting favorable eective
net pricing, partially oset by the higher commodity costs.
Unfavorable foreign currency reduced operating profit by
17percentage points. Operating profit growth benefited from
lower restructuring and impairment charges in 2009 related to
our Productivity for Growth program.