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Pepsico 2013 CAGNY Presentation

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Presentation given by Pepsi at the 2013 Consumer Analyst of New York conference

Presentation given by Pepsi at the 2013 Consumer Analyst of New York conference

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  • 1. Geared for GrowthCAGNY – February 21, 2013Hugh JohnstonChief Financial Officer
  • 2. Safe Harbor Statement of Terms & Non-GAAP InformationSafe Harbor Statement • Statements in this communication that are "forward-looking statements,” including our 2013 guidance, are based on currently available information, operating plans and projections about future events and trends. Terminology such as “believe,” “expect,” “intend,” “estimate,” “project,” “anticipate,” “will” or similar statements or variations of such terms are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in demand for PepsiCo’s products, as a result of changes in consumer preferences and tastes or otherwise; changes in the legal and regulatory environment; PepsiCo’s ability to compete effectively; PepsiCo’s ability to grow its business in emerging and developing markets or unstable political conditions, civil unrest or other developments and risks in the countries where PepsiCo operates; unfavorable economic conditions in the countries in which PepsiCo operates; increased costs, disruption of supply or shortages of raw materials and other supplies; failure to realize anticipated benefits from our productivity plan or global operating model; disruption of PepsiCo’s supply chain; damage to PepsiCo’s reputation; failure to successfully complete or integrate acquisitions and joint ventures into PepsiCo’s existing operations; PepsiCo’s ability to hire or retain key employees or a highly skilled and diverse workforce; trade consolidation or the loss of any key customer; any downgrade of our credit ratings; PepsiCo’s ability to build and sustain proper information technology infrastructure, successfully implement its ongoing business transformation initiative or outsource certain functions effectively; fluctuations in foreign exchange rates; climate change, or legal, regulatory or market measures to address climate change; failure to successfully renew collective bargaining agreements or strikes or work stoppages; any infringement of or challenge to PepsiCo’s intellectual property rights; and potential liabilities and costs from litigation or legal proceedings. • For additional information on these and other factors that could cause PepsiCo’s actual results to materially differ from those set forth herein, please see PepsiCo’s filings with the SEC, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.Non-GAAP Information • Please refer to the “Investors” section of PepsiCo’s web site at www.pepsico.com under the heading “Investor Presentations” to find disclosure and a reconciliation of any non-GAAP financial measures contained herein.Glossary • Beginning in the second quarter of 2012, organic results exclude the impact of foreign exchange translation. In addition, 2012 fourth quarter and full year organic results exclude the extra reporting week in 2011. Please refer to the Glossary and attachments to our February 14, 2013 earnings release, available at www.pepsico.com under the heading “Investor Presentations”, for the definitions of core, constant currency, organic and certain other terms used herein. 2
  • 3. PepsiCo Today Revenue $65B Organic Revenue Growth 5% Operating Margin 15% Net ROIC 15% Dividend Yield 3%Certain of the above items are reflected on a core basis and represent Non-GAAP financial measures that exclude certain items. Please refer to the“Reconciliation of GAAP and Non-GAAP Information” attachment posted on February 21, 2013 under the "Investors - Investor Presentations” section onPepsiCo’s website at www.pepsico.com to find disclosure and a reconciliation of the above non-GAAP financial measures. 3
  • 4. Positioned in Attractive Categories • Projected 5% category growth for snacks and beverages Beverages • Highly complementary Snacks 49% 51% • PepsiCo #1 globally in salty snacks Global • PepsiCo strong #2 globally Nutrition in beverages with leadership in many important marketsNote: Snacks/Beverage/Nutrition data is based on 2012 net revenue 4
  • 5. With a Broad Product Portfolio… Products Have Broad Appeal DAYPARTS COHORTS NEEDSTATES OCCASIONS 5
  • 6. Powerful Brands 22 $1Bn Brands 6
  • 7. Powerful Brands Over 40 $250M-$1Bn Brands 7
  • 8. PepsiCo Has 9 of the Top 40 Trademarks at Retail 1 15 29 2 16 30 3 17 31 4 18 32 5 19 33 6 20 34 7 21 35 8 22 36 9 23 37 10 24 38 11 25 39 12 26 40 13 27 14 2852 Weeks Ending Dec 30, 2012, SymphonyIRI Group - Total Store Advantage, Total US – MultiOutletC 8
  • 9. Balanced Geographic Footprint Products / Territories Emerging & Developing Markets We Have Products in More than 200 Significant Developing Countries and Territories and Emerging Markets Exposure Emerging & Developing 35% Developed 65% Both Snacks Only Beverages Only No PresenceNote: Developed and Emerging & Developing data is based on 2012 net revenue 9
  • 10. Consumption Highly Correlated to GDP/Capita Emerging Developed Per Capita Consumption 10K 20K GDP / CapitaSource: Euromonitor 10
  • 11. Lots of Growth Runway Salty Snack Per Capita Consumption (Index to Mexico) Mexico 100 Brazil 39 Russia 28 China 11 India 6Source: Euromonitor 11
  • 12. Recent Actions Have Strengthened Our Business Increased Brand Investment Stepped Up Innovation Strengthened Execution Productivity to Fund Margin Expansion & Future Investment Cash Flow Productivity & Returns 12
  • 13. Increased Brand Investment: Focus on Mega Brands 2012 A&M Up 50bps to 5.7% of Sales 13
  • 14. Crash the Superbowl HUGE CONSUMER ENGAGEMENT 22,000 ADS SUBMITTED OVER 7 YEAR HISTORY 2 OF TOP 10 SUPERBOWL SPOTS 14
  • 15. Do Us a Flavor 19 GLOBALLY MILLION SUBMISSIONS LIFT & SHIFT FROM THE UK TO 17 MARKETS INCLUDING POLAND, EGYPT & INDIA 15
  • 16. PepsiCo Sports Properties Leagues Pro Teams Colleges 16
  • 17. Stepped Up Innovation Innovation Across the Portfolio 17
  • 18. Doritos Locos Tacos 325 SOLD MILLION UNITS MOST SUCCESSFUL NEW PRODUCT IN TACO BELL HISTORY 18
  • 19. Quaker Real Medleys DELICIOUS PREMIUM 2012 BREAKFAST PRODUCT OATMEAL OF THE YEAR WITH REAL FRUIT AND NUTS 19
  • 20. Pepsi Next LESS 60% CALORIES COLA REAL TASTE $150 RETAIL MILLION AT 20
  • 21. Starbucks Refreshers 60 CALORIE SPARKLING BEVERAGE DELICIOUS BOOST OF ENERGY FROM GREEN COFFEE EXTRACT 21
  • 22. Trop 50 LESS 50% CALORIES LAUNCHED IN THE UK FOLLOWING SUCCESS IN US & CANADA 22
  • 23. Gatorade Energy Chews CARB ENERGY TO FUEL ATHLETES PERFORMANCE 23
  • 24. Strengthened Execution Frito Share of Salty Purchases PEP CSD Share of CSD Purchases with a CSD with Salty 2011 2012 2011 2012 +2pts +4pts +2pts +3pts 60% 62% 63% 59% 34% 35% 32% 32% When When Other PEP Other PEP Other PEP Other PEP CSD is: Salty is:Source: IRI Household panel, 2012 is rolling 12 months ending December 16, 2012 24
  • 25. Delivered Productivity of $1B in 2012 Procurement Sustainability Fleet Portfolio Automation & Technology GTM Strategy 25
  • 26. Cash Returns Strong 2012 Performance • Delivered $7.4 billion Management Operating Cash Flow (MOCF) ex-items • Cash conversion cycle improved by 9 days • Cap ex managed to 4% of net revenue • Returned $6.5 billion to shareholders MOCF Ex-Items per Share 5 Year CAGR of 11% $30 Billion Cash Returned to Shareholders in Last Five YearsNote - Certain of the above items represent Non‐GAAP financial measures that exclude certain items. Please refer to the “Reconciliation of GAAP and Non‐GAAP Information” attachmentposted on February 21, 2013 under the "Investors ‐ Investor Presentations” section on PepsiCo’s website at www.pepsico.com to find disclosure and a reconciliation of the above non‐GAAPfinancial measures. 26
  • 27. Balanced Profile Products Geographies Significant Emerging and Developing Markets Exposure Beverages Snacks 49% Emerging & 51% Developing 35% Developed 65% Global NutritionNote: Data is based on 2012 net revenue 27
  • 28. Portfolio Delivers Balanced Growth, ROIC and Margins Emerging Developing Developed Growth Driver Penetration Frequency Expansion Role in Portfolio Growth Absolute Margin/ROIC Margin Improvement ROIC Improvement Key Markets China, India Russia, Mexico, Brazil U.S., U.K., Canada 28
  • 29. How Revenue Growth Model Works Category Geography Growth Rate % of Revenue % of Growth Growth Rate % of Revenue % of Growth LSD-MSD LSD-MSD ~1/3 ~1/3 49% 65% MSD HSD-LDD ~2/3 ~2/3 Beverages 51% Developed 35% Snacks Emerging & Developing Mid-Single Digit Revenue GrowthAssumes: 3-5 year timeframe, currency neutral, no structural change 29
  • 30. Long-Term Goals Top Tier TSR • Revenue Growth MSD, • EPS HSD • Core MOCF growth mostly Organic = Net Income growth • Operating Margin • Balanced offerings between +30-50 bps / year • Strong returns to shareholders FFY, BFY, GFY (dividends and share • ROIC 50+ bps / year repurchases) • Increased Emerging & Developing Market Footprint • World-Class Brand Building and Innovation Supporting • Excellence in Execution Fundamentals: • Optimal Cost Structure and Capital Allocation • Best Place to WorkNote - Certain of the above items represent Non‐GAAP financial measures that exclude certain items. Please refer to the “Reconciliation of GAAP and Non‐GAAP Information” attachmentposted on February 21, 2013 under the "Investors ‐ Investor Presentations” section on PepsiCo’s website at www.pepsico.com to find disclosure and a reconciliation of the above non‐GAAPfinancial measures. 30
  • 31. 2013: Outlook Core Constant Currency EPS Growth +7%1 Organic Revenue Growth +Mid-Single Digits 2013 Productivity Savings ~$900M Commodity Inflation +Low-Single Digits A&M At Least 5.7% of Net Revenue Core Tax Rate ~27% MOCF (excluding certain items) More than $7B Net Capital Expenditures ~$3B (<5% of Net Revenue) Share Repurchases ~$3.0B Dividends ~$3.4B (+5.6% Increase in Div/Share)1. From PepsiCo’s fiscal 2012 core EPS of $4.10Note – Certain of the above items represent Non-GAAP financial measures that exclude certain items. Please refer to the “Reconciliation of GAAP and Non‐GAAP Information” attachmentposted on February 21, 2013 under the "Investors ‐ Investor Presentations” section on PepsiCo’s website at www.pepsico.com to find disclosure and a reconciliation of the above non‐GAAPfinancial measures. 31
  • 32. PEP Virtuous Circle• Mid-Single-Digit • Scale Leverage Revenue Growth, Mostly Organic • Aggressive Productivity Program • Brand Building • Innovation • Go-to-Market Capability 32

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