Currency swings hit Pepsi

PepsiCo Inc, the beverage and snack giant, said on Wednesday that its quarterly earnings fell 24%, putting it in the ranks of companies whose finances were dented by currency swings at the end of last year.

Sales declined slightly to $19.95 billion in the fourth quarter that ended Dec 27, from $20.12 billion in the year-ago period, the company said, and earnings dropped to $1.3 billion.

Adjusting for currency swings, restructuring costs and other extraordinary charges, PepsiCo’s income was $1.6 billion.

Indra Nooyi, chief executive of PepsiCo, said 2014 “was a tough year” because of volatility in the currency markets, unrest in Russia and falling gas prices that no one anticipated. “The market was quite volatile, and as the year went on, we got to the second half of the year, we started to really experience all the volatility.”

On Tuesday, Pepsi’s rival Coca-Cola Co reported sharply lower earnings as currency fluctuations and various restructuring charges took their toll.

Both companies face a more fundamental challenge, namely, that consumers are drinking less sugary soda. PepsiCo has Frito-Lay and Quaker to cushion it from that trend, and Frito-Lay by far accounted for the largest share of Pepsi’s operating profits.

Pepsi and Coke have vast portfolios of beverage brands and have worked to attract consumers to the teas, waters and juices they sell, which may account for the slight uptick in their sales in the United States last year.

For the year, PepsiCo’s were flat at $66.6 billion, and profits were $6.5 billion, compared with $6.7 billion in 2013.

The company said it would spend as much as $9 billion on higher dividends and share buybacks.