PepsiCo to Cut 8,700 Jobs, Reduce Management Layers in Global Productivity Drive

The company announced a series of strategic moves aimed at delivering 'top-tier, sustainable long-term growth for its shareholders.'

PepsiCo Inc. will shed 8,700 jobs in 30 countries -- about 3% of its global workforce -- as part of "a series of strategic-investment and productivity initiatives to deliver top-tier, sustainable long-term growth for its shareholders," the company said.

The reduction in headcount "will enhance the company's cost-competitiveness as well as provide a source of funding for future brand-building and innovation initiatives," PepsiCo said.

PepsiCo said it will boost its advertising and marketing spending by as much as $600 million this year, mostly in North America. As a percentage of revenue, PepsiCo said it expects to maintain or increase that level of marketing spending in the future.

Coinciding with the headcount reduction, the company announced a three-year "productivity program" expected to save $500 million annually.

The productivity push will include new technologies and processes; "heightened focus on best-practice sharing across the globe"; consolidating manufacturing facilities; and reducing management layers from its organizational structure.

"These decisions are based on a comprehensive review by the company's management of its portfolio, brands, costs, organization and capital structure," the company said in a news release.

"As a result of its review, the company reaffirmed its commitment to an integrated food and beverage portfolio through a one-company platform."

The company also announced a 4% increase in its annual dividend payment and a $3 billion share-repurchase program.

"In a volatile global environment over the past five years, PepsiCo has delivered double-digit compound annual growth in core net revenue, 8% compound annual growth in core EPS, and returned about $30 billion to shareholders in the form of dividends and share repurchases," PepsiCo Chairman and CEO Indra Nooyi said.

"Our goal is to continue on that earnings trajectory over the next five to 10 years, fully recognizing that we need to make changes in how we operate to address the challenges we identified in the review process. 2012 will be a transition year, in which we will be taking the appropriate steps to build a stronger, more successful company going forward."

Thursday morning, PepsiCo reported full-year net revenue of $66.5 billion, a 15% increase over 2010. Full-year earnings per share increased 3% to $4.03.

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