Pepsi 2013 Annual Report Download - page 70
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52
2013
On a reported basis, total operating profit increased 7% and operating margin increased 0.7 percentage points.
Operating profit growth was primarily driven by effective net pricing and planned cost reductions across a
number of expense categories, partially offset by certain operating cost increases including strategic initiatives
related to capacity and capability, higher advertising and marketing expenses and higher commodity costs.
Commodity inflation reduced operating profit growth by 2 percentage points, primarily attributable to
inflation in the Europe, LAF and AMEA segments, partially offset by deflation in the PAB and FLNA
segments. Operating profit also benefited from actions associated with our productivity initiatives, which
contributed more than $900 million in cost reductions across a number of expense categories among all of
our divisions. Other corporate unallocated expenses increased 7%, reflecting incremental investments in our
business. Items affecting comparability (see “Items Affecting Comparability”) positively contributed 2.6
percentage points to total operating profit growth and 0.3 percentage points to total operating margin.
Additionally, the gain from structural changes in the second quarter of 2013 due to the beverage refranchising
in our Vietnam business increased total operating profit growth by 1.5 percentage points (see Note 15 to our
consolidated financial statements). This gain was substantially offset during 2013 by incremental investments
in our business, primarily in the AMEA and Europe segments and in corporate unallocated expenses.
2012
On a reported basis, total operating profit decreased 5% and operating margin decreased 0.6 percentage
points. Operating profit performance was primarily driven by certain operating cost increases reflecting
strategic initiatives related to capacity and capability, higher commodity costs, higher advertising and
marketing expense and unfavorable foreign exchange, partially offset by effective net pricing. Other corporate
unallocated expenses increased 21%, primarily driven by increased pension expense. Commodity inflation
was approximately $1.2 billion compared to the prior period, primarily attributable to PAB, FLNA and
Europe. Operating profit also benefited from actions associated with our productivity initiatives, which
contributed more than $1 billion in cost reductions across a number of expense categories among all of our
divisions. Items affecting comparability (see “Items Affecting Comparability”) positively contributed 1.2
percentage points to the total operating profit performance and 0.4 percentage points to total operating margin.