← Previous | Next →

Delivering Performance with Purpose in 2007

Dear Shareholders:

We have titled this year's annual report "Performance with Purpose: The Journey Continues." That's because in 2007 PepsiCo made great progress toward the long-term corporate objectives we set for ourselves last year: To achieve business and financial success while leaving a positive imprint on society.

Once more, our extraordinary associates around the world delivered terrific performance, and I am delighted to share with you the following 2007 financial results:

  • Net revenue grew 12%, roughly three times the rate of global GDP growth.
  • Division operating profit grew 10%.*
  • Earnings per share grew 13%.*
  • Total return to shareholders was 26%.
  • Return on invested capital was 29%.
  • Cash flow from operations was $6.9 billion.
2007 Scorecard
2007 Scorecard
*See page 86.

In 2007 PepsiCo took important steps to support future growth.

What makes me particularly proud is that our 2007 performance was strong — not just measured by these short-term metrics — but also with the long-term equally in mind:

  • We increased capital expenditures in plant and equipment worldwide to enable growth of core brands and expand into new platforms such as baked and crisp-bread snacks and non-carbonated beverages.
  • We added several tuck-in acquisitions in key markets and segments, and we further expanded our successful coffee and tea joint ventures.
  • We created the Chief Scientific Officer position to ensure our technical capabilities keep pace with increasingly sophisticated consumer demand; and we funded incremental investment to explore breakthrough R&D opportunities.
  • We maintained focus on building next-generation IT capabilities with Project One Up, to support our long-term growth prospects worldwide.

Our brands once again demonstrated competitive strength.

On the ground, in cities and towns around the world, good brand strategies were implemented with operational excellence. I'd like to share a few notable examples of the big marketplace wins we enjoyed in 2007:

Earnings Per Share*
Earnings Per Share*
*See page 86.
  • Our carbonated soft drink and savory snack brands gained market share in the United States and in many of our top international markets.
  • In the United Kingdom, Baked Walkers crisps was named "New Product of the Year" by Marketing Week magazine.
  • SunChips snacks delivered double-digit growth in the United States as a result of great, innovative marketing and in-store execution.
  • 7UP H2Oh! was the fastest-growing brand in value and volume share in Brazil in its launch year.
  • Pepsi Max came of age as a global brand, with outstanding performance in the United States as Diet Pepsi Max, after successes in Northern Europe and Australia and 2007 launches across Asia.
  • PepsiCo beverage brands crossed the $1 billion mark in Russia retail sales.
  • We posted double-digit volume growth in China beverages and high-single-digit beverage volume growth in India.
Management Operating
Cash Flow **

$ in Millions

Management Operating Cash Flow **
**See page 55.

And we did all of this while battling increased commodity inflation and more macroeconomic volatility than in previous years.

In the next few pages you'll learn a lot more about the performance of our individual businesses from the leaders of PepsiCo Americas Foods, PepsiCo Americas Beverages and PepsiCo International.

← Previous | Next →