Purchase (New York): PepsiCo Inc., which has struggled with lagging sales of its soft drinks business in the US, announced plans to eliminate 3,300 positions globally, as it reported a 9.5 per cent drop in third-quarter profit and offered a downbeat profit outlook amid a surging US dollar.
The nation's second-largest drink maker said Tuesday it expects to generate a pretax savings of more than $1.2 billion over the next three years with $350 million to $400 million to be saved in 2009.
A chunk of the job cuts will be related to the closing of six plants. The majority of the savings will be invested in brand building, long-term research and development and growth initiatives in key markets, the company said.
"While we can't control the macro economic situation, we can enhance PepsiCo's operating agility to respond to the changing environment," said Indra Nooyi, Chairman and Chief Executive in a statement.
The company had net income of $1.58 billion, or 99 cents a share, in the quarter, compared with $1.74 billion, or $1.06 per share, a year earlier, on sales of $11.2 billion in the most recent period, compared with $10.17 billion a year ago.
Analysts surveyed by Thomson Reuters, who typically exclude items from estimates, expected earnings of $1.08 per share on revenue of $11.2 billion.
Pepsi also noted that the recent surge in the US dollar will hurt fourth-quarter profit.
At current rates, the incremental impact would be about 4 cents to 5 cents per share.
As a result, the company now expects to report 2008 earnings per share of $3.67 to $3.68, compared with prior guidance of $3.72. Analysts expected $3.74 per share for the full year.
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