Pepsi 2005 Annual Report Download - page 49

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47
2005
Net revenue increased 13% and volume
increased 9%. The volume increase
reflects double-digit growth in Oatmeal,
Aunt Jemima syrup and mix, Rice-A-Roni
and Pasta Roni, as well as high single-digit
growth in Cap’n Crunch cereal and mid
single-digit growth in Life cereal. Higher
effective net pricing contributed nearly
3 percentage points of growth reflecting
favorable product mix, the settlement of
prior year trade spending accruals and
price increases on ready-to-eat cereals
taken in the third quarter of 2004.
Favorable Canadian exchange rates
contributed nearly 1 percentage point to
net revenue growth. The additional week
in 2005 contributed approximately
2 percentage points to both net revenue
and volume growth.
Operating profit increased 13% reflect-
ing the net revenue growth. This growth
was partially offset by higher advertising
and marketing costs behind programs for
core brands and innovation, as well as an
unfavorable cost of sales comparison
primarily due to higher energy and raw
materials costs in the latter part of 2005.
The additional week in 2005 contributed
approximately 2 percentage points to
operating profit growth.
Smart Spot eligible products represented
approximately half of net revenue and had
double-digit revenue growth. The balance
of the portfolio also experienced double-digit
revenue growth.
2004
Net revenue increased 4% and volume
increased 3%. The volume increase
reflects high single-digit growth in
Oatmeal and double-digit growth in Life
cereal, partially offset by a mid single-digit
decline in Cap’n Crunch cereal. The Life
cereal growth was led by the introduction of
Honey Graham Life. Favorable product mix,
reflecting growth in higher revenue per
pound brands, was offset by promotional
spending behind new products. Favorable
Canadian exchange rates contributed
1 percentage point to net revenue growth.
Operating profit increased 1% reflecting
the net revenue growth, substantially offset
by an unfavorable cost of sales comparison
and higher advertising and marketing costs.
Smart Spot eligible products repre-
sented approximately half of net revenue
and had high single-digit revenue growth.
The balance of the portfolio was flat.
QFNA volume increased 9% in
2005 reflecting double-digit
growth in Oatmeal, Aunt
Jemima syrup and mix,
Rice-A-Roni and Pasta Roni.
Quaker Foods North America
% Change
2005 2004 2003 2005 2004
Net revenue $1,718 $1,526 $1,467 13 4
Operating profit $537 $475 $470 13 1