PepsiCo's Fourth-Quarter Profit Up One Year After Boosting Marketing Investment

Earnings Marks Anniversary of Pledging Millions in Additional Ad Spending

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PepsiCo said fourth-quarter profit rose 17% after boosting spending to market its 12 biggest brands.

PepsiCo's Indra Nooyi
PepsiCo's Indra Nooyi

Chief Executive Officer Indra Nooyi pledged a year ago to increase marketing and advertising by $500 million to $600 million in a bid to set the company up for long-term growth. Core brands Pepsi, Gatorade, Tropicana, Mtn Dew, Sierra Mist, Lipton, Mirinda, Lay's, Sun Chips, Cheetos, Doritos and Quaker have benefited from that investment. Ms. Nooyi has put significant investment behind U.S. soft drinks, including its Pepsi trademark, to revive lagging beverage sales and regain market share from Coca-Cola.

The company has also increased prices and worked to boost sales with new products, such as Gatorade Energy Chews, Pepsi Next and Mtn Dew Kickstart.

PepsiCo reported a 4% decline in full-year profits, though fourth-quarter profits jumped 17%. It also posted 5% organic revenue growth for the quarter and full year. Net revenue fell 1% for the quarter and 1.5% for the full year, due to impacts from structural changes and unfavorable foreign exchange, the company said.

PepsiCo Americas Foods volume grew 6% in the quarter, helped by acquisitions and higher sales of Frito-Lay products in North America. PepsiCo Americas Beverages posted low-single digit growth in non-carbonated beverages and a 1% decline in carbonated soft drink volume for the fourth quarter.

The company is projecting earnings per share will increase 7% in 2013.

~~With contributions from Bloomberg News~~

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