For all of 2002, earnings rose 14% to $1.96 per share, or $3.5 billion, while sales increased about 5% to $25 billion. Synergies with recently purchased Quaker and gains at Frito-Lay improved profit margins, while return on invested capital (ROIC) rose 2 points to 28%.
For the year, volume on snacks, beverages, and Quaker products rose a very strong 8%, while Gatorade's volume soared 17%. The company is ahead of schedule in integrating the Quaker division. It saw $250 million in merger synergies this year, and expects $400 million in annual synergies by 2004.
The company also announced a management shuffle and the formation of a new division, PepsiCo International, to oversee food and beverage operations outside the United States and Canada. Pepsi is working toward its goal of being the No. 1 beverage company in the U.S. It just may have a chance.
Ineffective commercials continue to plague rival Coca-Cola
The ads target (as always) young people, and here's what the company had to say: "... It's about talking to them at a deeper level. No one's going to slam back a Coke in a way that seems forced or staged. They may slam back a Coke, but it has to feel real."
Wow. That's deep.
At $40 per share, Pepsi trades at 20 times trailing earnings and 18 times the 2003 estimate, which calls for $2.19 per share, or 12% growth. The company is valued at 22 times trailing free cash flow.
Jeff Fischer owns a few shares of both Coca-Cola and PepsiCo in dividend reinvestment plans.