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The net impact of the divestiture of our Mexico beverage
business in the fourth quarter contributed 1percentage point
to reported operating profit growth and included a one-time
gain associated with the contribution of this business to form
a joint venture with both Cultiba and Empresas Polar.
Europe
% Change
2012 2011 2010 2012 2011
Net revenue $ 13,441 $ 13,560 $ 9,602 (1) 41
53rd week – (33) –
Net revenue excluding above item* $ 13,441 $ 13,527 $ 9,602 (1) 41
Impact of foreign exchange translation 7 (3)
Net revenue growth excluding above item, on a constant currency basis* 6 38
Operating profit $ 1,330 $ 1,210 $ 1,054 10 15
Merger and integration charges 11 123 111
Restructuring and impairment charges 42 77 –
53rd week – (8) –
Inventory fair value adjustments – 25 40
Operating profit excluding above items* $ 1,383 $ 1,427 $ 1,205 (3) 18
Impact of foreign exchange translation 6 (4)
Operating profit growth excluding above items, on a constant currency basis* 3 14
* See “Non-GAAP Measures”
2012
Net revenue decreased 1%, primarily reflecting unfavorable
foreign exchange, which reduced net revenue growth by 7per-
centage points, partially offset by effective net pricing. Our
acquisition of WBD positively contributed 2percentage points
to the net revenue performance.
Snacks volume grew 3%, mainly due to our acquisition
of WBD, which contributed 2 percentage points to volume
growth and declined slightly for the comparable post-
acquisition period. Double-digit growth in Russia (ex-WBD)
and mid-single-digit growth in South Africa were partially
offset by a mid-single-digit decline in Poland. Additionally, the
United Kingdom was flat.
Beverage volume increased 1%, primarily reflecting our
acquisition of WBD, which contributed over 1percentage point
to volume growth and increased at a low-single-digit rate for
the comparable post-acquisition period. Volume growth also
reflected mid-single-digit growth in Turkey and low- single-
digit growth in Russia (ex-WBD) and the United Kingdom.
These increases were partially offset by a high-single-digit
decline in Poland and a low-single-digit decline in Germany.
Operating profit increased 10%, primarily reflecting the
items affecting comparability in the above table (see “Items
Affecting Comparability”). Excluding these items affect-
ing comparability, operating profit declined 3%, driven by
higher commodity costs and unfavorable foreign exchange,
which reduced operating profit performance by 17 percent-
age points and 6 points, respectively, as well as other cost
increases reflecting certain strategic investments. These
impacts were partially offset by the effective net pricing and
planned cost reductions across a number of expense cat-
egories. Additionally, certain impairment charges primarily
associated with our operations in Greece reduced reported
operating profit growth by 2percentage points.
2011
Net revenue grew 41%, primarily reflecting our acquisition of
WBD, which contributed 29percentage points to net revenue
growth, and the incremental finished goods revenue related to
our acquisitions of PBG and PAS. Favorable foreign exchange
contributed 3percentage points to net revenue growth.
Snacks volume grew 35%, primarily reflecting our acqui-
sition of WBD, which contributed 31percentage points to
volume growth. Double-digit growth in Turkey and South
Africa and high-single-digit growth in Russia (ex-WBD)
were partially offset by a mid-single-digit decline in Spain.
Additionally, Walkers in the United Kingdom experienced low-
single-digit growth.
Beverage volume increased 21%, primarily reflecting our
acquisition of WBD, which contributed 20percentage points to
volume growth, and incremental brands related to our acquisi-
tions of PBG and PAS, which contributed nearly 1percentage
point to volume growth. A double-digit increase in Turkey and
mid-single-digit increases in the United Kingdom and France
were offset by a high-single-digit decline in Russia (ex-WBD).
Reported operating profit increased 15%, primarily
reflecting the net revenue growth, partially offset by higher
commodity costs. Our acquisition of WBD contributed
Management’s Discussion and Analysis
2012 PEPSICO ANNUAL REPORT64