Pepsi profit pops 14% in 9 months

MANILA, Philippines – Pepsi-Cola Products Philippines Inc. (PCPPI) saw a 14 percent growth in its nine-month profit to P706 million on higher sales and efficient productivity initiatives to manage costs.

“Our net income margin has expanded by 18 basis points year-to-date. This is a fruitful outcome of the Company’s drive to foster efficiency in our operations,” PCPPI president Furgan Ahmed Syed said in a statement.

For the third quarter alone, the beverage firm posted a net profit of P146 million, up five percent year on year. Revenues rose six percent, bringing the nine-month total to P23.7 billion, driven by the growth in all major product categories.

“Our year-to-date performance can be attributed to the company’s strong focus on driving productivity & building revenues in a very challenging operating environment. The quarter saw a sharp increase in sugar prices coupled with very challenging industry pricing. Despite that, we managed to grow our topline & bottomline for the quarter,” Syed said.

Cost of goods sold went up by nine percent both for the July to September period and nine-month period, driven by volume growth, higher depreciation and higher price of sugar in the latter part of the third quarter.

Gross profit amounted to P1.5 billion in the third quarter and P4.9 billion for the first nine months, an increase of 6.3 percent from the previous year.

Operating expenses increased by 4.1 percent for the nine-month period over year ago, notably growing slower than revenue.

“Operating expenses expressed as a percentage of net sales were 0.8 percent lower than year-ago level for the nine-month period driven by cost management initiatives,” PCPPI said.

PCPPI recently launched Gatorade White Lightning and carbonated juice drink Tropicana Frutz, further strengthening its line-up in the light refreshment beverage category.

The company has joined other beverage firms in opposing a measure that seeks to levy an additional 10 percent ad valorem tax on sweetened drinks. The group, which comprises the Beverage Industry Association of the Philippines (BIAP), claimed the bill is “anti-poor and anti-business”.

The government is estimated to generate up to P10 billion in additional revenues a year from higher taxes on sweetened beverages.