PepsiCo to cut 8,700 jobs

PepsiCo said it plans to cut 8,700 jobs, or about three per cent of its workforce, as it tries to offset higher costs for ingredients and increased spending on advertising in North America.

The maker of everything from Pepsi soda to Doritos chips said it expects the restructuring will save the company US$1.5 billion by 2014.

That's on top of US$1.5 billion in cost cutting it previously announced.

Pepsi announced the layoffs on Thursday as it reported better-than-expected fourth-quarter profit, but forecast a five per cent decline in adjusted 2012 earnings.

On the mixed news, the company's shares fell 2.7 per cent.

Like most snack and soda makers, Pepsi is facing higher costs for materials it uses to make, package and transport its products, including aluminum.

Pepsi rival Coca-Cola Company announced its own cost-cutting programme on Tuesday, although Coke did not say it was reducing its workforce.

For its part, Pepsi said "tough decisions" needed to be made because it expects 2012 will be the second year in a row that it will encounter higher-than-average costs for commodities.

CEO Indra Nooyi said although PepsiCo is cutting about three per cent of its 300,000 worldwide workforce, the reduction is spread out over 30 countries. The company typically adds about 10,000 to 15,000 jobs in any one year.

For the fourth quarter ended December 31, the Purchase, New York-based company said Thursday that its net income rose four per cent to US$1.42 billion, or 89 cents per share. That's up from US$1.37 billion, or 85 cents per share, last year.

Revenue rose 11 per cent to US$20.16 billion.

For the year, net income rose two per cent to US$6.46 billion, or US$4.03 per share. That compares with US$6.33 billion, or $3.91 per share.

Revenue rose 15 per cent to US$66.5 billion from US$57.84 billion.