The stock price of PepsiCo, Inc. (NYSE:PEP) declined after the company released its fourth quarter financial results on Thursday morning. The beverage and snack foods company posted earnings that beat the consensus estimates of Wall Street analysts, but its revenue was lower than expected. The shares of the company dropped 3% to $79.04 per share as of 12:14 PM in New York.
PepsiCo, Inc. (NYSE:PEP) reported $1.12 earnings per share excluding one-time items, higher than the $1.03 average estimate of analysts based on data compiled by Thomson Reuters. The beverage and snack foods maker generated $20.1 billion revenue, lower than the $20.2 billion in revenue expected by analysts.
In a statement, Indra Nooyi, chief executive officer of PepsiCo, Inc. (NYSE:PEP) said, “We are pleased to report that PepsiCo achieved its financial goals for 2013, despite continued challenging and volatile macroeconomic conditions around the globe. We look ahead to 2014 with confidence that our business is positioned to continue to perform well and to generate attractive returns for our shareholders.”
Cash returns and guidance
PepsiCo, Inc. (NYSE:PEP) announced that it will increase share buybacks as well as increase dividend payments to shareholders by a total of 35% this year. The company raised its dividend by 15% to $2.62 from $2.27 per share to be distributed in June, and plans to execute a $5 billion share buyback.
The beverage and snack foods maker anticipated that its earnings will grow 7% this year, excluding the negative impact of commodity hedges, restructuring charges, currency devaluation in Venezuela and the positive impact of tax settlement. PepsiCo, Inc. (NYSE:PEP) expected that its revenues will increase in the mid-single digits.
In addition, the company disclosed a $5 billion cost-saving program through 2019, which will come from various strategies such as accelerating its investments in automated manufacturing, closure of certain manufacturing plants and expansion of shared services. PepsiCo, Inc. (NYSE:PEP) said it is still on track towards achieving its previously announced $3 billion cost-saving program for the years 2012 to 2014.
PepsiCo rejects Peltz proposal
The management of PepsiCo, Inc. (NYSE:PEP) rejected the proposal of activist investor Nelson Peltz to spin-off its North-American beverage unit. The company’s soda sales in the business have been dropping in the region because many consumers are becoming more health-conscious and opting to buy non-carbonated drinks.
Nooyi explained, “Decoupling our beverage and snack businesses in North America would significantly reduce our relevance to our customers.”