The idea of splitting PepsiCo in two has been taken “off the table”, chairman and CEO Indra Nooyi has insisted after the US food and beverage giant set out its new “strategic priorities”.
Earlier today, PepsiCo outlined a series of plans to revitalise the business, including more investment in advertising, a streamlining of the company’s management and a raft of job cuts.
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The announcement followed months of speculation about the future direction of PepsiCo. Analysts have agitated for the business to split in two to generate more value for the shareholders.
Speaking to reporters in New York, Nooyi dismissed any suggestion that PepsiCo might revisit the idea of splitting the business if the review did not have the desired results.
“Snacks and beverages works very well together across the world and the synergies that we get from offering them together are so high that the disruption would be enormous,” Nooyi said. “We don’t think it makes sense and it’s not that we don’t want to revisit, we look at these options all the time, because we have one singular goal, how do we create shareholder value, and so using that, we look at all these options all the time.
“We have taken it off [the table] right now, because it doesn’t make sense,” she added.
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By GlobalDataPepsiCo plans to cut 8,700 jobs, which represents around 3% of the US food and drink giant’s global workforce. Nooyi declined to comment on specific geographies or divisions that might be affected.
“In the productivity programme we simplified the organisational structure. What happens in any countries is, you say between the CEO and the frontline there are going to be nine layers, and over time people come in and layers get added, then you go back and you get it back to nine. This is part of the ebb and flow of any organisation,” she told attendees.
“We are creating a more streamlined structure. The number is 3% of the job force globally, the number in the US is much lower than the 3%,” she added. “By and large it is really not feet on the street.”
Nooyi, who has been at the helm of PepsiCo since 2006, has overseen a push into healthier products across both its snacks and drinks divisions. Yet, some industry observers believe it has distracted her from turning around the core soft drink business, which has suffered, particularly in North America.
However, she told analysts today that, despite her five-year anniversary at the helm approaching this year, she has no intention of stepping down yet.
“I love getting up in the morning and coming to work to PepsiCo… my hope, my goal, my desire is to keep running the company as long as I am creating value and as long as my board of directors want me to keep running the company.”
PepsiCo’s share price slumped 3.52% to $64.39 at 12.30 ET today.
