Facing continued weakness in the U.S. liquid refreshment beverage category, which resulted in disappointing performance in our domestic beverage business, PepsiCo Inc. on Oct. 14 reported a 10 percent drop in net income in its third quarter ended Sept. 6 and announced it will close up to six plants and eliminate about 3,300 jobs.
The bad news came despite a 2 increase in volume and 11 percent increase in overall net revenue in the quarter. Year-to-date figures show a 13 percent increase in net revenue and a 1 percent increase in net income.
"In the third quarter, our worldwide snacks and international beverage businesses performed well once again. We had solid top- and bottom-line results in the face of a challenging macro environment and the most difficult quarterly comparisons on commodity cost inputs, said Chairman/CEO Indra Nooyi. We were adversely impacted by continued weakness in the U.S. liquid refreshment beverage category We are taking important steps to revitalize our beverage portfolio."
The 3,300 jobs cuts will come globally, about 40 percent relating to the closing of the six plants and other capacity rationalization actions, which will be announced by the end of the year.
Those steps are included in the Productivity for Growth initiative, a broad-based productivity program, which we expect will produce $1.2 billion in pre-tax savings over three years. The majority of the savings will be invested in our businesses. A primary focus will be restoring growth to our North American beverage business. At the same time, we will increase our investment in developing markets, make selective investments to continue growing our global snacks business and accelerate our global R&D initiatives to help secure our future innovation pipeline. We firmly believe that now is the time to invest in our future growth."
See http://phx.corporate-ir.net/phoenix.zhtml?c=78265&p=irol-newsArticle&ID=1209173&highlight= for the full announcement about the PepsiCo layoffs