NEW YORK, Feb 4: Pepsico Inc "feels good" about fourth-quarter and year end results, despite lower-than- expected domestic snack food results and continued pricing pressures in its North American beverage business, Peggy Moore, vice president for investor relations, said."We did expect to be down a little bit in the quarter and we were," Moore said in a conference call with analysts.
Analysts said 1998 could be another moderate year as the company spends money on marketing, new product roll-outs and takes on Coca-Cola Co in some international markets."The international beverage business will remain a challenge," said Martin Romm, an analyst with Credit Suisse First Boston. "They'll find themselves competing with Coke more aggressively in markets in Latin America and the Far East."
Emanuel Goldman, an analyst with Paine Webber, said Pepsi should begin to see results from its marketing and new products in late 1998 and especially in 1999 and 2000.
The company launched the new, "blue" look for its Pepsibrand in January. By the end of May, it plans to have completed national roll out of its Deli Lays chips, the fat-free Wow chips made with the Olestra and its new Doritos 3D Snacks, Moore said.Goldman also said Pepsi should be able to take advantage of the overseas snack food market, where it reigns supreme, in 1998. The company had international snack foods sales of $3.41 billion in 1997.
"It's going to be a year where we're looking for further progress in the international soft drink business and going to have continued action in the snack food business overseas," he said.The company posted a year-end operating loss of $137 million in its international beverage business, an improvement over the $830 million operating loss at the end of 1996.
Moore said the company plans to aggressively seek fountain business in 1998, which may result in some up-front costs that would put pressure on results.Pepsi also expects a "fair amount" of earnings per share growth from share repurchases, Moore said. The companyplans to spend about $3 billion on share buybacks this year, she said. That follows the $2.5 billion it spent to repurchase 69 million shares last year, the company said.
Romm said the company's growth rate in 1998 is not likely to come from operations but from having fewer shares outstanding and more cash on the balance sheet.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
