Pepsi-Cola PH profit down 10% in 2014

Listed Pepsi-Cola Products Philippines Inc. said profit sank 10 percent in 2014, citing intensifying competition early in the year and “trickle over” effects from Supertyphoon “Yolanda” that hammered the country in late 2013.

The company said in a stock exchange filing Monday that profit hit P810.94 million last year compared with P903.47 million posted in 2013.

It said sales rose 13 percent to P29.81 billion during the same period while operating expenses rose 11 percent to P5.22 billion, the filing showed.

Pepsi Philippines, a licensed bottler of PepsiCo. Inc. and Pepsi Lipton International Ltd., is known for manufacturing popular carbonated and non-carbonated drinks like its namesake Pepsi Cola, 7Up, Mountain Dew, Tropicana juice and Gatorade sports drink.

Most of its sales come from the Philippines with just 0.05 percent classified as “foreign sales,” its 2014 annual report showed.

Pepsi Philippines has bottling facilities in Muntinlupa City, Sto.Tomas, Rosario, Pampanga, Naga, Cebu, Iloilo, Bacolod, Tanauan, Davao, Cagayan de Oro and Zamboanga.

“Effective cost management resulted in a reduction of operating expenses, as a percentage of net sales by 130 basis points in the fourth quarter and 30 basis points for the full year,” Pepsi Philippines said.

The company pointed to gains in the fourth quarter of 2014, when gross sales revenues rose 13 percent to P7.9 billion.

“Though net income declined by 10 percent for the full year, on account of competitive pricing actions in the first half of 2014 as well as trickle over impact of Typhoon Yolanda, net income for the fourth quarter was up 56 percent, making it the second quarter in a row of double digit net income growth and ahead of gross revenue growth,” Pepsi Philippines said in its filing.

Thus, a strong turnaround was evident in the second half of 2014 versus the first half, driven by volume growth, improved pricing and leverage on operating expenses, it added.

“We are very pleased with the progress we have made during the year. We delivered strong topline growth amid a modestly growing carbonated softdrinks industry and a continuously intensifying competitive landscape,” Furqan Ahmed Syed, Pepsi Philippines president, said in a separate statement.

“We also made tangible progress on building operating capability that would future-proof our business and help us in delivering profitable growth in the years ahead,” he said.

“These gains were made possible by the company’s relentless focus on expanding distribution, supported by prudent investments in capability and infrastructure development,” Jika Dalupan, Pepsi Philippines vice president for Corporate Affairs and Communications, said in the same statement. Miguel R. Camus