Once upon a time, Coca-Cola
The snack and beverage giant reported Thursday that fourth-quarter earnings rose 8% to $985 million from $914 million, while revenue for the period increased 9% to $8.8 billion from $8 billion. For 2004, the top line was up 8.5% to $29 billion from $27 billion, and net income climbed 18% to $4.2 billion from $3.6 billion.
The story behind these numbers is solid performance across the company's operating segments. In the large and hotly contested North American market, PepsiCo mustered some small but significant gains for 2004. For instance, even though it faced higher cooking oil and fuel costs, Frito Lay improved margins somewhat and increased volume 3%. Quaker Oats, which struggled earlier in 2004, showed signs of turning around and achieved a 3% volume gain. Finally, the beverage segment saw 2% volume growth thanks to an 8% rise in noncarbonated drinks such as Gatorade and Tropicana juice drinks. PepsiCo even managed to squeeze out a 1% volume gain in the carbonated category.
The international sphere, though, is where PepsiCo is really shining. In the beverages area, the company saw double-digit volume growth in Europe, the Middle East, Africa, and Asia. Snack volume was not as robust, but still strong, with total international volume jumping 8%. This growth is by no means inconsequential, since the international area became the largest division on a revenue basis in 2004.
The company seems likely to continue to ride out the momentum in its non-cola segments and in its international business. For the moment, PepsiCo is winning the war by playing by new rules.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.