Pepsi 2005 Annual Report Download - page 46

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44
2005
Net revenue grew 8% reflecting volume
growth of 4.5% and positive effective net
pricing driven by salty snack pricing
actions and favorable mix on both salty
and convenience foods products. Pound
volume grew primarily due to mid single-
digit growth in trademark Lay’s potato
chips, high single-digit growth in salty
trademark Tostitos, double-digit growth in
Santitas, mid single-digit growth in trade-
mark Cheetos, high single-digit growth in
Dips and Fritos, and double-digit growth in
Sun Chips. These gains were partially offset
by the discontinuance of Toastables and
Doritos Rollitos. Overall, salty snacks rev-
enue grew 8% with volume growth of 5%,
and convenience foods products revenue
grew 13% with volume growth of 1%.
Convenience foods products revenue
benefited from favorable mix. The additional
week contributed 2 percentage points to
volume and net revenue growth.
Operating profit grew 6% reflecting
positive effective net pricing actions and
volume growth. This growth was offset by
higher S&D costs resulting from increased
labor and benefit charges and fuel costs;
higher cost of sales, driven by raw materi-
als, natural gas and freight; and increased
advertising and marketing costs. Operating
profit was also negatively impacted by
more than 1 percentage point as a result
of fourth quarter charges to reduce costs in
our operations, principally through head-
count reductions. The additional week con-
tributed 2 percentage points to operating
profit growth.
Products qualifying for our new Smart
Spot program represented approximately
13% of net revenue. These products expe-
rienced double-digit revenue growth, while
the balance of the portfolio had high sin-
gle-digit revenue growth. See our website
at www.smartspot.com for additional
information on our Smart Spot program.
2004
Net revenue grew 5% reflecting volume
growth of 3% and positive effective net
pricing due to salty snack pricing actions
and favorable mix. Pound volume grew
primarily due to new products, single-digit
growth in Lay’s Classic potato chips, strong
double-digit growth in Variety Pack and mid
single-digit growth in Tostitos and Fried
Cheetos. Lay’s Stax and Doritos Rollitos led
the new product growth. These gains were
partially offset by single-digit declines in
Doritos and Fritos and double-digit declines
in Rold Gold and Quaker Toastables.
Operating profit grew nearly 7% reflect-
ing the positive pricing actions and volume
growth. Higher commodity costs, driven
by corn oil and energy costs were largely
offset by cost leverage generated from
ongoing productivity initiatives.
Smart Spot eligible products repre-
sented approximately 10% of 2004 FLNA
net revenue. These products experienced
high single-digit revenue growth and the
balance of the portfolio had mid single-
digit revenue growth.
FLNA volume grew 4.5% in
2005 and 3% in 2004.
Frito-Lay North America
% Change
2005 2004 2003 2005 2004
Net revenue $10,322 $9,560 $9,091 85
Operating profit $2,529 $2,389 $2,242 67