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63PepsiCo, Inc. 2008 Annual Report
Middle East, Africa & Asia
% Change
2008 2007 2006 2008 2007
Net revenue $5,575 $4,574 $3,440 22 33
Operating prot $÷«667 $÷«535 $÷«401 25 34
Impact of restructuring and
impairment charges 15 14 –
Operating prot, excluding
restructuring and
impairment charges $÷«682 $÷«549 $÷«401 24 37
2008
Snacks volume grew 10%, reecting broad-based increases led
by double-digit growth in China, the Middle East and South Africa.
Additionally, Australia experienced low-single-digit growth and
India grew at mid-single-digit rates.
Beverage volume grew 11%, reecting broad-based increases
driven by double-digit growth in China, the Middle East and India,
partially offset by low-single-digit declines in Thailand and the
Philippines. Acquisitions had a nominal impact on beverage
volume growth. CSDs grew at a high-single-digit rate and non-
carbonated beverages grew at a double-digit rate.
MEAA experienced double-digit volume growth in both
2008 and 2007.
Net revenue grew 22%, reecting volume growth and favor-
able effective net pricing. Acquisitions contributed 2 percentage
points and foreign currency contributed 1 percentage point to the
net revenue growth.
Operating prot grew 25%, driven by the net revenue growth,
partially offset by increased commodity costs. Foreign currency
contributed 2 percentage points and acquisitions contributed
1 percentage point to the operating prot growth. The impact of
the fourth quarter restructuring and impairment charges in 2008
related to the Productivity for Growth program was offset by the
prior year restructuring charges. Operating prot, excluding
restructuring and impairment charges, grew 24%.
2007
Snacks volume grew 19%, reecting broad-based growth. The
Middle East, Turkey, India, South Africa and China all grew at
double-digit rates, and Australia grew at a high-single-digit rate.
Acquisitions contributed 4 percentage points to volume growth.
Beverage volume grew 11%, reecting broad-based growth
led by double-digit growth in the Middle East, Pakistan and China,
partially offset by a high-single-digit decline in Thailand and a
low-single-digit-decline in Turkey. Acquisitions had no impact
on the growth rates. Both CSDs and non-carbonated beverages
grew at double-digit rates.
Net revenue grew 33%, reecting volume growth and favor-
able effective net pricing. Foreign currency contributed 5.5 per-
centage points to net revenue growth. Acquisitions contributed
11 percentage points to net revenue growth.
Operating prot grew 34%, driven by volume growth and
favorable effective net pricing, partially offset by increased raw
material costs. Foreign currency contributed 7 percentage points
to operating prot growth. Acquisitions contributed 1 percentage
point to the operating prot growth rate. The absence of amorti-
zation expense recorded in 2006 related to prior acquisitions
contributed 11 percentage points to operating prot growth.
The impact of restructuring actions taken in the fourth quarter
of 2007 to reduce costs in our operations, rationalize capacity
and realign our organizational structure reduced operating prot
growth by 3.5 percentage points. Operating prot, excluding
restructuring and impairment charges, grew 37%.
OUR LIQUIDITY AND CAPITAL RESOURCES
Global capital and credit markets, including the commercial
paper markets, experienced in 2008 and continue to experience
considerable volatility. Despite this volatility, we continue to have
access to the capital and credit markets. In addition, we have
revolving credit facilities that are discussed in Note 9. We believe
that our cash generating capability and nancial condition,
together with our revolving credit facilities and other available
methods of debt nancing (including long-term debt nancing
which, depending upon market conditions, we intend to use to
replace a portion of our commercial paper borrowings), will be
adequate to meet our operating, investing and nancing needs.
However, there can be no assurance that continued or increased
volatility in the global capital and credit markets will not impair
our ability to access these markets on terms commercially
acceptable to us or at all.
In addition, our cash provided from operating activities is
somewhat impacted by seasonality. Working capital needs are
impacted by weekly sales, which are generally highest in the third
quarter due to seasonal and holiday-related sales patterns, and
generally lowest in the rst quarter.