PURCHASE, N.Y. — Healthier snacks and nutritious, functional beverages represent a growing portion of PepsiCo’s portfolio, as the company strives to appeal to changing consumer tastes. Such products as Baked Lay’s potato chips, Sabra Greek yogurt spreads and Tropicana juice with probiotics are among recent innovations from the Purchase-based company.
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| Indra Nooyi, chairman and c.e.o. of PepsiCo |
“Simply put, when it comes to transforming our portfolio we are making considerable progress,” said Indra Nooyi, chairman and chief executive officer, during a Feb. 15 earnings call. “What we refer to as ‘everyday nutrition products’ account for approximately 25% of our portfolio by net revenue. These are products that include positive nutrients like grains, fruits and vegetables or protein, plus those that are naturally nutritious like water and unsweetened tea.
“And what we refer to as ‘guilt-free products’ comprises about 45% of net revenue. This broader definition includes the everyday nutrition products plus diet beverages and other beverages with fewer than 70 calories per 12 oz. and snacks with low levels of sodium and saturated fat.”
By comparison, she said, Pepsi-Cola soft drinks accounted for 12% of net revenue in 2016.
Under PepsiCo’s “robust innovation agenda,” the company has produced net revenue from products introduced within the past three years of, on average, more than $5 billion since 2013, Ms. Nooyi said.
“And we are pleased to report that in 2016 PepsiCo accounted for over 17% of innovation sales at retail as measured by I.R.I. in the United States — more innovation than from the next four innovation contributors combined,” she said.
Net income attributable to PepsiCo in the year ended Dec. 31, 2016, was $6,329 million, equal to $4.36 per share on the common stock, which was up 16% from $5,452 million, or $3.67 per share, in the prior fiscal year. Net revenue was $62,799 million, which was even with $63,056 million the year before. Excluding certain factors, organic revenue grew 3.7%, which was in line with the company’s previously stated goal of approximately 4%.
For the fourth quarter, net income attributable to PepsiCo was $1,401 million, or 97c per share, down 18% from $1,718 million, or $1.17, in the year-ago quarter. Net revenue increased 5% to $19,515 million from $18,585 million.
“The operating environment continued to be challenging in 2016, so in this context I am pleased to report that we achieved or exceeded each of the financial goals we shared with you at the beginning of the year,” Ms. Nooyi said. “Our two largest divisions, Frito-Lay North America and North American Beverages, each had strong well-balanced performance with volume gains, net price realization and margin expansion driving high-single-digit core constant currency operating profit growth.”
Meanwhile, the company continues to make strong productivity gains, delivering another $1 billion in savings in 2016.
Looking ahead, management expects organic revenue growth of at least 3%, reflecting a cautious macroeconomic outlook, and core earnings per share growth of 8% in constant currency.
