After publishing PepsiCo's (PEP) recent fourth quarterly report, the new CEO Ramon Laguarta reiterated he is satisfied with the Company’s product and geographic portfolios and, therefore, has no plans to divest its operations by shedding or acquiring any significant businesses.
However, the company has put into motion a new restructuring program that may lead to an unspecified number of job losses and factories closures over the coming years. This is also expected save billions of dollars in associated costs for the company.
As of today, PEP expects that this program may come at a cost of approx. $2.5 billion in terms of pre-tax restructuring charges through 2023, mostly from severance and other employee costs. In its FY 2018 results, the company allocated $138 million towards these restructuring costs with a further projected expense of $800 million in related charges during the current year.
PEP is optimistic about its future growth anticipating organic revenue to rise 4% this year over last year’s 3.7%. However, core earnings excluding currency fluctuations are expected to fall by approx. 1% due to items including a higher tax rate and investments being made this year. The Company further expects to spend ~$4.5 billion on capex in 2019, a y-o-y increase of more than $1billion.