PepsiCo to cut 8,700 jobs globally, eyes $1.5bn saving by 2014
Global food and beverages giant PepsiCo will cut 8,700 jobs across 30 countries as part of a programme to save up to USD 1.5 billion by 2014 to offset high commodity costs and increased spending on advertising and marketing.
New York: Global food and beverages giant PepsiCo will cut 8,700 jobs across 30 countries as part of a programme to save up to USD 1.5 billion by 2014 to offset high commodity costs and increased spending on advertising and marketing.
The firm plans to increase advertising and marketing support behind its global brands by USD 500-600 million in 2012, with particular focus on North America.
PepsiCo said it is undertaking a multi-year productivity programme for cost savings, under which it will consolidate manufacturing, warehouse and sales facilities; and implement simplified organisation structures, with wider spans of control and fewer layers of management.
"This effort includes headcount reductions of about 8,700 employees across 30 countries, about 3 per cent of the company's global workforce," PepsiCo said in a statement.
PepsiCo Chief Financial Officer Hugh Johnston said the company has to take "some tough decisions" as it implements its strategic priorities in 2012.
"As a result, 2012 will be a year of transition, one in which we will make the right investments to position PepsiCo properly to achieve long-term high-single-digit core constant currency earnings per share growth," Johnston said.
Comments from PepsiCo India on the job cuts impact in the country could not be obtained immediately.
The company today reported a net income of USD 1.41 billion during the quarter ended December 31, 2011 as against USD 1.36 billion in same period previous year, up 4 percent.
Its net revenue during the period under review increased by 11 percent to USD 20.15 billion, compared to USD 18.15 billion in the year-ago period.
In 2011, PepsiCo's net income was USD 6.44 billion, up 2 percent from USD 6.32 billion in the previous year. Net revenue for the year was USD 66.50 billion, as against USD 57.83 billion -- up 15 percent.
In the fourth quarter, snacks volume grew double digits in China, India and the Middle East. Beverage volume growth was driven by double-digit gains in India, Saudi Arabia and Vietnam, the company said without specifying details.
On its future plans, PepsiCo said that in 2012 it "will step up its strategic brand investments by USD 500-600 million, particularly in North American beverages and food."
Additionally, incremental investments in routes and display racks will total about USD 100 million.
The company said it anticipates a second consecutive year of global commodity cost inflation that is well above historic levels.