Hugh Johnston, PepsiCo, Inc. (PEP)’s CFO: Innovation Is Key To Growth

Hugh Johnston, Chief Financial Officer of PepsiCo, Inc. (NYSE:PEP), feels good about Russia and believes the consumers are very cautious at the moment. Johnston also believes that innovation has played a key role in the company’s good performance and steady growth. During a recent intervention with Maria Bartiromo on FOX Business Network, Hugh Johnston has discussed Nelson Peltz’s suggestion to break up the company, how the recent events in Eastern Europe have affected their business in Russia and how the company managed to surpass market expectations for the 2014 second quarter.

PepsiCo, Inc. (NYSE:PEP)

“… one of the things we have done is we’ve driven productivity and invested that productivity back in our brands and we’ve invested it in innovation and that’s what’s enabled us to perform as well as we have,” said Johnston.

The company has registered a 3.6% revenue growth during the 2014 second quarter, beating analyst expectations. PepsiCo, Inc. (NYSE:PEP)’s revenue in the emerging markets has grown 8%, signaling a strong position of the company in those countries. Business in Europe grew 5%, while Asia, Middle East and Africa business increased by 7%. The company has also been successfully improving productivity, which allowed it “to drive 65 basis points of operating margin improvement.” Johnston also states that PepsiCo is satisfied with the strengthening of all its brands across the globe, which he also attributes to the company’s innovation efforts.

When asked to comment on the Nelson Peltz’s proposal to break up the company, Hugh Johnston insisted everybody would be better off if the portfolio stayed intact. He cites the company’s 9% Earnings Per Share (EPS) growth in 2013 and more than 9% EPS growth in the first 6 months of 2014. He thus claims PepsiCo, Inc. (NYSE:PEP) is performing “awfully well” and that “this portfolio truly is better together.” Johnston also argues that, should the company be taken apart, the business would register an increase in costs, which would hinder revenue growth.

“… you’d add a lot of costs back into the business where we should be looking to take costs out of the business”, commented Johnston.

Hugh Johnston uses their business strategy in the emerging markets to back up his claim. He argues that international expansion is firstly driven by the company’s beverage branch, which paves the way for the snack business to be built later on.

Johnston plays down the impact of the current crisis in Ukraine on PepsiCo, Inc. (NYSE:PEP)’s business in Russia, stating that the company is present in more than 200 countries and that they often have to deal with tense geopolitical situations. During the previous quarter, the company has registered mid-single digit revenue growth in Russia and does not expect the situation to change dramatically.

consumers still need to eat and still need to drink even in the midst of challenging geopolitical times. We do see the business continue to perform well”, added Johnston.

He admits that the recent currency fluctuations have become an issue for the company, but is confident they can price their way through that.

You can watch the full interview below:


Disclsoure: none.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!