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

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

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!