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54 PepsiCo, Inc. 2009 Annual Report
Management’s Discussion and Analysis
Quaker Foods North America
% Change
2009 2008 2007 2009 2008
Net revenue $1,884 $1,902 $1,860 (1) 2
Operating profit $÷«628 $÷«582 $÷«568 82.5
Impact of restructuring and
impairment charges 131 –
Operating profit, excluding
restructuring and
impairment charges $÷«629 $÷«613 $÷«568 38
2009
Net revenue declined 1% and volume was flat. Low-single-digit
volume declines in Oatmeal and high-single-digit declines in
trademark Roni were offset by high-single-digit growth in
ready-to-eat cereals. Favorable net pricing, driven by price increases
taken last year, was offset by unfavorable mix. Unfavorable foreign
currency reduced net revenue growth by 1 percentage point.
Operating profit increased 8%, primarily reflecting the absence
of prior year restructuring and impairment charges related to our
Productivity for Growth program, which increased operating profit
growth by 5 percentage points. Lower advertising and marketing,
and selling and distribution expenses, also contributed to the
operating profit growth.
2008
Net revenue increased 2% and volume declined 1.5%, partially
reflecting the negative impact of the Cedar Rapids flood that
occurred at the end of the second quarter. The volume decrease
reflects a low-single-digit decline in Quaker Oatmeal and ready-to-
eat cereals. The net revenue growth reflects favorable effective
net pricing, due primarily to price increases, partially offset by the
volume decline. Foreign currency had a nominal impact on net
revenue growth.
Operating profit increased 2.5%, reflecting the net revenue
growth and lower advertising and marketing costs, partially offset
by increased commodity costs. The negative impact of the flood
was mitigated by related business disruption insurance recoveries,
which contributed 5 percentage points to operating profit. The
fourth quarter restructuring and impairment charges related to our
Productivity for Growth program reduced operating profit growth
by 5 percentage points. Foreign currency had a nominal impact on
operating profit growth. Operating profit, excluding restructuring
and impairment charges, grew 8%.
Latin America Foods
% Change
2009 2008 2007 2009 2008
Net revenue $5,703 $5,895 $4,872 (3) 21
Operating profit $÷«904 $÷«897 $÷«714 126
Impact of restructuring and
impairment charges 340 39
Operating profit, excluding
restructuring and
impairment charges $÷«907 $÷«937 $÷«753 (3) 24
2009
Volume declined 2%, largely reflecting pricing actions to cover
commodity inflation. A mid-single-digit decline at Sabritas in
Mexico and a low-single-digit decline at Gamesa in Mexico was
partially offset by mid-single-digit growth in Brazil.
Net revenue declined 3%, primarily reflecting an unfavorable
foreign currency impact of 14 percentage points. Favorable effective
net pricing was partially offset by the volume declines.
Operating profit grew 1%, reflecting favorable effective net
pricing, partially offset by the higher commodity costs. Unfavorable
foreign currency reduced operating profit by 17 percentage points.
Operating profit growth benefited from lower restructuring and
impairment charges in the current year related to our Productivity
for Growth program.
2008
Volume grew 3%, primarily reflecting an acquisition in Brazil, which
contributed nearly 3 percentage points to the volume growth.
A mid-single-digit decline at Sabritas in Mexico, largely resulting
from weight-outs, was offset by mid-single digit growth at Gamesa
in Mexico and double-digit growth in certain other markets.
Net revenue grew 21%, primarily reflecting favorable effective
net pricing. Gamesa experienced double-digit growth due to
favorable pricing actions. Acquisitions contributed 9 percentage
points to the net revenue growth, while foreign currency had a
nominal impact on net revenue growth.
Operating profit grew 26%, driven by the net revenue growth,
partially offset by increased commodity costs. An insurance recovery
contributed 3 percentage points to the operating profit growth.
The impact of the fourth quarter restructuring and impairment
charges in 2008 related to our Productivity for Growth program
was offset by prior year restructuring charges. Acquisitions contrib-
uted 4 percentage points and foreign currency contributed
1 percentage point to the operating profit growth. Operating
profit, excluding restructuring and impairment charges, grew 24%.
88045_pepsico-09ar_33-59_R1.indd 54 2/24/10 4:50 PM