Pepsi 2014 Annual Report Download - page 73

Download and view the complete annual report

Please find page 73 of the 2014 Pepsi annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 166

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166

53
Total Net Revenue and Operating Profit
Change
2014 2013 2012 2014 2013
Total net revenue $ 66,683 $ 66,415 $ 65,492 — % 1 %
Operating profit
FLNA $ 4,054 $ 3,877 $ 3,646 5 % 6 %
QFNA 621 617 695 1 % (11)%
LAF 1,211 1,242 1,059 (2.5)% 17 %
PAB 2,846 2,955 2,937 (4)% 1 %
Europe 1,331 1,293 1,330 3 % (3)%
AMEA 1,043 1,174 747 (11)% 57 %
Corporate Unallocated
Mark-to-market net (losses)/gains (68) (72) 65
Restructuring and impairment charges (41) (11) (10)
Pension lump sum settlement charges (141) — (195)
Venezuela remeasurement charges (126) (124) —
Other (1,149) (1,246) (1,162)
$ (1,525) $ (1,453) $ (1,302) 5 % 12 %
Total operating profit $ 9,581 $ 9,705 $ 9,112 (1)% 7 %
Total operating profit margin 14.4% 14.6% 13.9% (0.2) 0.7
2014
On a reported basis, total operating profit decreased 1% and operating margin decreased 0.2 percentage
points. Operating profit performance was primarily driven by certain operating cost increases including
strategic initiatives related to capacity and capability, higher commodity costs and unfavorable foreign
exchange. Commodity inflation negatively impacted operating profit performance by 4 percentage points,
primarily attributable to inflation in the LAF and Europe segments, partially offset by deflation in the PAB
and FLNA segments. These impacts were partially offset by favorable effective net pricing and the benefit
of actions associated with our productivity initiatives, which contributed more than $1 billion in cost
reductions across a number of expense categories throughout all of our segments. Additionally, the impact
of certain charges associated with productivity initiatives outside the scope of the 2014 and 2012 Productivity
Plans negatively impacted operating profit performance by nearly 1 percentage point, primarily in the Europe
and AMEA segments. Other corporate unallocated expenses decreased 8%, primarily reflecting decreased
pension expense, as well as the lapping of incremental investments into our business in the prior year, partially
offset by higher foreign exchange transaction losses. Items affecting comparability (see “Items Affecting
Comparability”) negatively impacted total operating profit performance by 3.8 percentage points and total
operating margin by 0.6 percentage points.
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