Pepsi’s H1 profits dip on stiffer competition

SCREENGRAB from www.pepsiphilippines.com

Pepsi-Cola Products Philippines Inc. (PCPPI) posted an 11-percent drop in second quarter net profit to P344 million on stiff competition and higher operating expenses.

This brought its six-month net profit to P480 million—27 percent lower than that of a year ago, PCPPI on Friday reported to the Philippine Stock Exchange.

In the second quarter, PCPPI’s sales volume went up by 11 percent year-on-year, driven by growth across major product categories and market geographies. As a result, gross sales revenue grew by 11 percent year-on-year for the quarter, reaching P8.3 billion.

“A double digit topline growth is a commendable feat, considering a sluggish and highly competitive soft drinks industry,” said PCPPI president Furqan Ahmed Syed.

Competitive pricing, higher depreciation and amortization and increased operating expenses, however, curbed PCPPI’s bottom line for the quarter.

“The damage caused by Supertyphoon ‘Yolanda’ continued to dent our profitability. However, its impact is lower than in the first quarter. Despite these challenges, the company will continue with its long term strategy of distribution and manufacturing investments supported by marketing programs to continue our growth momentum,” said PCPPI vice president for corporate affairs and communications Jika Dalupan.

For the second quarter, PCPPI invested P861 million to boost manufacturing and distribution assets. Meanwhile, cost of goods sold increased by 14 percent in the second quarter compared to the same period last year due to the rise in volume, capital expenditure, depreciation and amortization.

Operating expenses likewise increased by 10 percent. As a percentage of net sales, however, operating expenses were just at the same level as the comparative period last year.

For the six-month period, gross sales went up by 10 percent year-on-year to P14.72 billion.

PCPPI is the exclusive bottler of PepsiCo beverages in the Philippines for the past 66 years. Lotte Chilsung, one of the biggest beverage companies in South Korea, is the lead shareholder of PCPPI.  Doris C. Dumlao