Pepsi 2008 Annual Report Download - page 64

62 PepsiCo, Inc. 2008 Annual Report
Management’s Discussion and Analysis
Operating prot increased 7%, reecting the net revenue
growth, partially offset by higher cost of sales, mainly due to
increased fruit costs, as well as higher general and administrative
costs. The impact of restructuring actions taken in the fourth
quarter was fully offset by the favorable impact of foreign
exchange rates during the year. Operating prot was also positively
impacted by the absence of amortization expense related to a
prior acquisition, partially offset by the absence of a $29 million
favorable insurance settlement, both recorded in 2006. The
impact of acquisitions reduced operating prot by less than
1 percentage point. Operating prot, excluding restructuring and
impairment charges, increased 8%.
United Kingdom & Europe
% Change
2008 2007 2006 2008 2007
Net revenue $6,435 $5,492 $4,750 17 16
Operating prot $÷«811 $÷«774 $÷«700 511
Impact of restructuring and
impairment charges 50 9 –
Operating prot, excluding
restructuring and
impairment charges $÷«861 $÷«783 $÷«700 10 12
2008
Snacks volume grew 6%, reecting broad-based increases led by
double-digit growth in Russia. Additionally, Walkers in the United
Kingdom, as well as the Netherlands, grew at low-single-digit rates
and Spain increased slightly. Acquisitions contributed 2 percent-
age points to the volume growth.
Beverage volume grew 17%, primarily reecting the expansion
of the Pepsi Lipton Joint Venture and the Sandora and Lebedyansky
acquisitions, which contributed 16 percentage points to the growth.
CSDs increased at a low-single-digit rate and non-carbonated
beverages grew at a double-digit rate.
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net pricing and volume growth.
Net revenue grew 17%, reecting favorable effective net
pricing and volume growth. Acquisitions contributed 8 percentage
points and foreign currency contributed 2 percentage points to
the net revenue growth.
Operating prot grew 5%, driven by the net revenue growth,
partially offset by increased commodity costs. Acquisitions contrib-
uted 5.5 percentage points and foreign currency contributed
3.5 percentage points to the operating prot growth. Operating
prot growth was negatively impacted by 5 percentage points,
resulting from higher fourth quarter restructuring and impairment
charges in 2008 related to the Productivity for Growth program.
Operating prot, excluding restructuring and impairment charges,
grew 10%.
2007
Snacks volume grew 6%, reecting broad-based increases led
by double-digit growth in Russia and Romania, partially offset by
low-single-digit declines at Walkers in the United Kingdom and
in France. The acquisition of a business in Europe in the third
quarter of 2006 contributed nearly 2 percentage points to the
reported volume growth rate.
Beverage volume grew 8%, reecting broad-based increases
led by double-digit growth in Russia and Poland, partially offset
by a high-single-digit decline in Spain. The acquisition of a non-
controlling interest in a business in the Ukraine in the fourth
quarter of 2007 contributed 3 percentage points to the reported
volume growth rate. CSDs grew at a low-single-digit rate while
non-carbonated beverages grew at a double-digit rate.
Net revenue grew 16%, primarily reecting volume growth
and favorable effective net pricing. Foreign currency contributed
9 percentage points to net revenue growth, primarily reecting
the favorable euro and British pound. The net impact of acquisi-
tions reduced net revenue growth slightly.
Operating prot grew 11%, driven by the net revenue growth,
partially offset by increased raw material costs and less-favorable
settlements of promotional spending accruals in 2007. Foreign
currency contributed 10 percentage points of growth, primarily
reecting the favorable British pound and euro. The net impact
of acquisitions reduced operating prot growth by 4 percentage
points. Operating prot, excluding restructuring and impairment
charges, grew 12%.