PURCHASE, N.Y. — PepsiCo, Inc. benefited from investments made over the past year to become a “faster, stronger and better” organization. The company met or exceeded each of its full-year financial targets and delivered accelerated top-line growth, said Ramon L. Laguarta, chairman and chief executive officer.
Net income attributable to PepsiCo for the year ended Dec. 28, 2019, was $7,314 million, equal to $5.20 per share on the common stock, down 42% from $12,515 million, or $8.78 per share, for the previous fiscal year. Excluding restructuring and impairment charges, pension-related settlement charges, net tax benefits and other items affecting comparability, adjusted net income was $7,775 million, which compared with $8,065 million the year before.
Net revenue totaled $67,161 million, up 3.9% from $64,661 million.
For the fourth quarter, net income plunged 74% to $1,766 million, or $1.26 per share, from $6,854 million, or $4.83 per share, in the comparable period. On an adjusted basis, net income of $2,035 million in the recent quarter compared with $2,119 million the year before.
Net revenue advanced 5.7% to $20,640 million from $19,524 million.
“Our organic revenue growth accelerated to 4.5% for the full year 2019 versus 3.7% in 2018, exceeding the initial target we set a year ago,” Mr. Laguarta said during a Feb. 13 earnings call with securities analysts. “All our divisions contributed to this growth, including a 3% increase in developed markets and an 8% increase in developing and emerging markets.”
Operating profit in the Frito-Lay North America segment grew 5% for the year and 3% for the quarter, reflecting productivity savings and net revenue growth, which were partially offset by operating cost increases and higher advertising and marketing expenses. Segment revenue increased 4.5% for the year and 3% for the quarter.
“Frito's results were driven by the investments we made in innovation, marketing and consumer insights, supply chain and manufacturing and go-to-market capacity,” Mr. Laguarta said. “This included a double-digit increase in advertising and marketing spend, additional plant, warehouse and distribution center capacity, and additional routes, racks and selling resources.
“Frito delivered net revenue growth in all of its large mainstream brands like Lay’s, Doritos, Tostitos, Cheetos, Ruffles and Fritos and double-digit growth in emerging premium brands such as Bare and Off the Eaten Path. Our multipack offerings also delivered very good growth as we have continuously expanded the variety of brand and flavor combinations.”
Quaker Foods North America operating profit declined 15% for the year and 21% for the quarter, as productivity savings were more than offset by operating cost increases, higher commodity costs and higher advertising and marketing expenses. Segment revenue increased 1% for the year and was flat compared to the prior-year quarter.
PepsiCo Beverages North America operating profit decreased 4% for the year but increased 5% for the quarter. Results were impacted by certain operating cost increases, higher advertising and marketing expenses and higher commodity costs. Segment revenue grew 3% for the year and 4% for the quarter.
“The business benefited from improved local market focus and execution driven by our new field structure, increased go-to-market capacity, significantly stepped-up advertising support, innovation and additional selling resources,” Mr. Laguarta said. “Innovation played a very important role at P.B.N.A. this year with Gatorade Zero, bubly and Mountain Dew Game Fuel having cumulatively delivered more than $1 billion in measured retail sales. Other brands, including Propel and Lifewater, delivered strong double-digit net revenue growth, while Pure Leaf and Starbucks delivered high single-digit growth in 2019.
“Finally, we have plans in place to build on our recent innovation successes. We will invest in BOLT24, a functional beverage we launched last year that supports athletes around the clock by providing advanced, all-day hydration. We recently introduced Zero Sugar variants of Mountain Dew and Mountain Dew Game Fuel, which offer the same bold taste as the originals without the sugar. And we will roll out Pepsi Cafe, a coffee-infused cola beverage that will be available for a limited-time offering in U.S. stores as of April.”
Developing and emerging markets delivered high single-digit growth for the full-year despite ongoing volatility and global uncertainty, Mr. Laguarta said.
“Each of our international divisions delivered strong organic revenue growth in ‘19,” he said. “These results include some performance across our developing and emerging markets, with high single-digit organic revenue growth for both the fourth quarter and the full year. We continue to have a long runway for growth in many international markets, and our results reflect the benefits of our increased investments as we continue to leverage our global capabilities to drive higher per capita consumption and improve market share, while executing in locally relevant ways.”
Looking ahead, he added, “We expect to deliver 4% organic revenue growth and 7% core constant-currency earnings per share growth in 2020. And we will continue to invest back into the business to evolve our portfolio and transform our value chain; build next-generation capabilities, particularly leveraging technology to enhance our insights, speed and precision; grow our talent and simplify our organization to be more consumer and customer-centric; invest in our brands, both large and emerging; and reduce our cost structure to free up resources to fund our investments.
“These priorities will always be executed with an eye toward enhancing our marketplace competitiveness and delivering, of course, long-term value creation.”