Pepsi Cutting 8700 Jobs as Part of $1.5B Savings Plan
PepsiCo Inc, the world’s largest snack-food maker, announced its plans Thursday to cut 8,700 jobs across the globe in order to offset high commodity costs and boost investment in advertising and marketing in North America.
According to a report by Reuters, PepsiCo – the maker of Sierra Mist soda, Tropicana juice and Gatorade, among other brands – saw its shares fall more than 4 percent in morning trading, with investors unsure if the moves would be enough to stem Pepsi’s decline in U.S. marketshare versus its arch rival Coca-Cola.
The snack and drink giant said it expects the restructuring will save the company $1.5 billion by 2014. That’s on top of $1.5 billion in cost cutting it previously announced.
“Hopefully these cost saves and reinvestments will pay off, but it will take some time before we really know,” said Edward Jones analyst Jack Russo. “The company has great brands and wonderful overseas presence, but investors want points on the board sooner rather than later.”
As part of their restructuring plan, Pepsi aims to add up to $600m to its advertising and marketing budget around the world, with extra focus on the North America markets.
Check out the 2012 Pepsi MAX Super Bowl commercial below:
In addition to the layoffs, PepsiCo also announced that the chief of its Global Beverage Group, Massimo d’Amore, would retire. The company recently named former Frito-Lay chief Albert Carey to run the business.
Meanwhile, PepsiCo reported a fourth-quarter profit of $1.42 billion, or 89 cents per share, up from $1.37 billion, or 85 cents per share, a year earlier.
Excluding one-time items, PepsiCo earned $1.15 per share, beating analysts’ consensus estimate of $1.13 per share, according to Thomson Reuters.
“Running a large company is like doing a car race,” PepsiCo’s CEO Indra Nooyi said Thursday in an interview on Bloomberg Television. “Occasionally, you have to stop and refuel yourself in the pit stop, and that is what we’re doing in 2012.”