PepsiCo India reports ‘mid-single digit’ growth in October-December quarter
New Delhi: American food and beverages maker PepsiCo Inc. has grown at a “mid-single digit” rate during the October-December quarter in India, its global chairman and chief executive officer Indra Nooyi said on Tuesday. India and Mexico are the only two markets that grew at this rate during the quarter.
Nooyi, however, hinted at a better outlook. “Post GST (Goods and Services Tax), Indian market is coming back,” Nooyi told investors on a call after the American food and beverages maker announced its fourth quarter results on Tuesday. The Indian government implemented GST, the country’s biggest tax reform, on 1 July 2017.
The mid-single digit growth rate for PepsiCo India may not reflect the real state of business for the company in the country. The growth number is in comparison with October-December 2016 quarter when India went through demonetisation which, as Nooyi told investors on PepsiCo’s earnings call on 15 February 2017, had significant impact on its business in the fourth quarter.
While PepsiCo does not report India numbers separately, in its results statement on 15 February 2017, the company noted a 1.5% decline in revenue in Asia, Middle East and North Africa (AMENA) region, which includes India market, for quarter ended 31 December 2016.
For October-December 2017 quarter, PepsiCo’s revenue for AMENA stood flat at $1.89 billion, according to its statement issued on Tuesday.
Globally, PepsiCo reported a revenue of $19.53 billion for the three months ended 31 December 2017, compared to $19.52 billion in the corresponding year-ago period. On a reported basis, PepsiCo posted a quarterly loss of $0.50 per share during the period under review.
PepsiCo has been under pressure in India for the past few years with falling sales, rising competition and changing consumer preferences. Its local entity had, for the fiscal year ended 31 March 2017, reported revenue at Rs 6,540 crore, according to its filings with Registrar of Companies (RoC). It is less than Rs 6,994.8 crore reported for the year ended 31 March 2013, according to Mint report on 21 December.
PepsiCo Inc, in its earnings statement on Tuesday, said the American firm’s earnings in Asia, Middle East and North Africa (AMENA) region were “positively “impacted by the Jordan refranchising gain, productivity gains and a gain on an asset sale in India”.
Last quarter, PepsiCo divested parts of its bottling operations in some states in India to its largest bottling partner Varun Beverages Ltd, a unit of Ravi Kant Jaipuria owned RJ Corp.
Last month, Varun Beverages got the distribution rights for PepsiCo India’s non-carbonated drinks brands Tropicana, Lipton tea, Gatorade and Quaker Oats. During the past three months, Varun Beverages has acquired bottling units and franchisee rights in five more Indian states. At present, Varun Beverages has the franchise for PepsiCo products in 20 Indian states and two Union territories. On 8 February, Jaipuria told Mint that Varun Beverages will be open to acquiring more bottling operations of PepsiCo if the American company decides to divest.