Bottler Pepsi-Cola Products Philippines Inc. on Tuesday reported a lower net income during the first quarter of the year, weighed by higher sugar prices and spending for a start-up snacks business.
In a disclosure to the Philippine Stock Exchange, Pepsi-Cola said its net income in the first three months fell by 17 percent to P159.26 million from P191.98 million a year earlier.
The firm attributed the bottom line weakness to the expensive price of sugar and expenditure requirement to jumpstart its snacks business.
The company is now locally producing the Cheetos brand, which is being sold much cheaper versus the imported counterpart. Several other international snack brands are expected to follow suit.
Gross sales revenue increased by 12 percent to P8.19 billion from P7.31 billion in the same comparable period.
The growth is reflected across the company’s major product categories and geographies, driven by volume growth and strong focus on revenue management, the company said.
“We are pleased by a strong start to the year. Our beverage business grew in double digits backed by innovations. Our snacks business is also off to an encouraging start. Consumers are loving the idea of being able to buy their favorite Cheetos and Lays brands at very affordable prices,” Furgan Ahmed Syed, the company’s president said.
The cost of goods sold increased by 16 percent, mainly because of a sharp increase in sugar prices.
“It was a tough quarter from a profit perspective, largely due to very high sugar prices versus the same period last year. We are further accelerating our productivity journey to mitigate the impact of sugar pricing balance of the year,” Syed said.
The company made substantial investments in manufacturing and distribution assets amounting to P1.5 billion to sustain a strong top line performance. Operating expenses expressed as a percentage of net sales were 144 basis points or 1.44 percent better than the same period last year, driven by the company’s prudent cost management initiatives.
In February, the company inaugurated its snacks factory in Laguna as part of the long-term strategy to further diversify its product offerings.