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PepsiCO CEO Indra Nooyi is Stepping Down from the Company

Wall Street was shocked to learn this week that PepsiCo’s (NASDAQ:PEP) CEO Indra Nooyi is stepping down this October.

Nooyi’s departure, after spending 12 years as leader of the beverage and snack giant, could pave the way for PepsiCO to split its snack and beverage units.

Activist investor Nelson Peltz had spent three years in in the company trying to push for a split.  “The investment bankers have been knocking on our door forever,” said Nooyi to analysts earlier this year.

President Ramon Laguarta will be taking Nooyi’s place on October 3rd but Nooyi will remain as chairwoman until early 2019. Laguarta, 54, has been president of the company since last September.

Nooyi tweeted about her departure, “Today is a day of mixed emotions for me. @PepsiCo has been my life for 24 years & part of my heart will always remain here. I’m proud of what we’ve done & excited for the future. I believe PepsiCo’s best days are yet to come.”

On Laguarta taking her position, she tweeted, “Ramon Laguarta is exactly the right person to help build on @PepsiCo’s strong position and success. He has been a critical partner and friend and I am positive that he will take PepsiCo to new and greater heights in the years to come.”

“This transition could open a wider door to Pepsi considering a variety of potential alternatives, including stepped up refranchising … even potentially splitting up the company,” remarked Wells Fargo analyst Bonnie Herzog.

PepsiCo (NASDAQ:PEP) reported second quarter earnings last month that revealed that net income dropped to $1.82 billion, or $1.28 a share, compared to $2.12 billion, or $1.46 a share, a year earlier. The company’s “core” earnings were $1.61 a share, which was better than the $1.52 that had been expected by analysts. Revenue of $16.09 billion was also better than the $16.04 billion that had been expected.

Nooyi had said during the earnings call, “We are pleased with our results for the second quarter and we remain on track to achieve the financial targets we set out at the beginning of the year.” She added, “The majority of our businesses performed very well, particularly our international divisions propelled by continued growth in developing and emerging markets, and our North America Beverages sector posted sequential net revenue and operating profit performance improvement.”

Regarding the earnings beat, Wells Fargo Herzog had remarked, “We are disappointed.” She said that despite better North American beverage sales, the division still remains “challenged.”

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