Pepsi net profit up by 20% as gross revenues hit P6B

Beverage-maker Pepsi-Cola Products Philippines Inc. (PCPPI) grew its net profit by 20 percent year-on-year in the first quarter to P270 million, backed by a double-digit rise in sales volume.

Gross revenues reached P6 billion for the quarter—up by 14 percent as sales volume rose by 18 percent over the same quarter last year.

“This significant achievement was driven by increasing distribution coverage with the intent of reaching more consumers from various consumer segments. We also focused on product expansion and aggressive marketing programs, with equally supported investments in containers, coolers, vehicles and manufacturing”, PCPPI president Partho Chakrabarti said in a statement.

Cost of Sales—consisting primarily of raw and packaging materials, direct labor and manufacturing overhead—increased by 13 percent year-on-year, but at a slower pace than overall volume growth of 18 percent.

This was attributed by the company to an improvement in cost efficiencies.

The rise in cost of sales increase was due to higher volume, increase in marketing to back aggressive programs and higher depreciation and amortization from capital expenditure investments, the company said. As a result, PCPPI’s gross profit reached P1.4 billion—14 percent higher than a year ago.

Meanwhile, operating expenses consisting of selling and distribution, general and administrative, and marketing expenses likewise increased by 12 percent against that of the same period in 2012.

“We operated in a marketplace marked [by] intense competition,” said Jika Dalupan, PCPPI’s vice president. “Fortunately, our notable top-line growth helped fund strategic investments in sales and distribution infrastructure and personnel as well as marketing campaigns.”

PCPPI is the exclusive bottler of PepsiCo beverages in the Philippines, with a relationship spanning 66 years.

Lotte Chilsung, one of the biggest beverage companies in South Korea, is the lead shareholder of PCPPI and co-manages it with PepsiCo.

PCPPI manufactures and sells brands such as Pepsi-Cola, Mountain Dew, 7-Up, Mirinda, Mug, Gatorade, Tropicana, Lipton, Sting and Premier.