PepsiCo, Inc. recently reported its results for the fourth quarter and full-year 2022. The company’s Frito-Lay’s division full-year 2022 results reported an increased operating profit of 9% only for the U.S. market.

Europe, on the other hand, and Asia Pacific, Australia, New Zealand, and China Region (APANC) on the other were both registered on a decreasing trend. Among the major operating growth setbacks were the potato and cooking oil prices in almost all of the targeted markets (U.S., Europe, and APANC).

“Operating profit increased by 9%, primarily reflecting the effective net pricing and productivity savings. These impacts were partially offset by certain operating cost increases, including strategic initiatives, a 17% impact of higher commodity costs, primarily cooking oil, potatoes, and seasoning, and higher advertising and marketing expenses. (…) The 53rd reporting week contributed 2% to operating profit growth,” the report reveals.

Discussion of full-year 2022 reported division results regarding Frito-Lay Europe shows that the operating profit performance was negatively impacted by a 91% impact of higher commodity costs, primarily packaging materials, raw milk, and potatoes, certain operating cost increases, the organic volume decline, a 4% impact of less favorable settlements of promotional spending accruals compared to the prior year and a 4% impact of payments to employees for a change in pension benefits.

“These impacts were partially offset by effective net pricing, productivity savings, and lower advertising and marketing expenses. Unfavorable foreign exchange negatively impacted operating profit performance by 7% points,” according to the document.

Frito-Lay APANC reported an operating profit performance negatively impacted by a 25% impact of higher commodity costs, primarily cooking oil and potatoes, certain operating cost increases, and higher advertising and marketing expenses, partially offset by the net revenue growth and productivity savings. Additionally, prior-ear impairment charges associated with an equity method investment positively contributed 3 percentage points to operating profit performance. Unfavorable foreign exchange negatively impacted operating profit performance by 4%, the company’s experts reported.

“We are pleased with our results for the fourth quarter and the full year as our business remained resilient and delivered another strong year of growth. Our results demonstrate that the investments we have made in our people, brands, portfolio, value chain, and go-to-market systems are working,” Chairman and CEO Ramon Laguarta said.

He continued, mentioning that the company will continue to focus on driving growth and winning in the marketplace while developing advantaged capabilities to fortify its businesses for the long term. This includes embedding pep+ at the center of PepsiCo’s business in how it innovates, operates, runs its teams, and builds its brands.

“For 2023, we expect to deliver 6% organic revenue growth and 8% core constant currency earnings per share growth. We also announced a 10% increase in our annualized dividend, starting with our June 2023 payment which represents our 51st consecutive annual increase, and plan to repurchase approximately USD1.0bn worth of shares,” Laguarta concluded.

Organic revenue growth is a measure that adjusts for the impacts of foreign exchange translation, acquisitions, divestitures, and other structural changes, and every five or six years, the impact of the 53rd reporting week, including the company’s 2022 financial results.

Operating profit is the money left after paying all business costs, but before paying taxes. An operating profit shows that a business can generate more money than it spends.