New York, Oct 15 - This year has been one of the most difficult ever for PepsiCo Inc , but the financial crisis of recent weeks has not hurt the ability of the snack and soft drink maker to borrow, a senior executive said.
A nationwide housing slump, credit crunch, job losses and high gas prices have hurt soft drink sales as cash-strapped consumers make fewer trips to gas stations and convenience stores, eat out less often and drink tap water to save money.
"The domestic beverage business is at a historically low level," PepsiCo Chief Financial Officer Richard Goodman said in an interview.
"I don't think there's been another year in which the industry as a whole has actually seen a volume decline, which is what we've seen."
Goodman acknowledged the severity of the current crisis in the credit markets, but said it had not yet impacted the company's ability to get loans.
"From a liquidity standpoint we're in a pretty good situation ... compared to some other companies," Goodman said.
He said Pepsi's short-term lenders had not radically changed demands regarding interest rates or loan durations.
Pepsi earlier reported a 9.6 percent fall in quarterly profit, missing Wall Street estimates as strong results at Frito-Lay and in international markets could not offset falling beverage sales in North America.
The company also reduced its full-year outlook.
Pepsi shares closed nearly 12 percent lower at $54.40.
PEPSI REVAMP
A weak economy and continuously disappointing soft drink sales have spurred Pepsi to revamp its brands and streamline operations. The company said on Tuesday it would cut 3,300 jobs, or 1.8 percent of its work force.
"It's pretty clear that the economic climate is a difficult one and in that you really want to make sure that you are cost-competitive," Goodman said, noting that the cuts are the most comprehensive for the company in as many as eight years.
The company plans to use some of the projected $1.2 billion in cost savings for new marketing of soft drink brands like Pepsi, Mountain Dew and Sierra Mist, as well as an upgraded line of Gatorade sports drinks.
The financial markets turmoil has so far not had a huge impact on demand for the company's drinks and snacks. "If you look globally, the numbers we're seeing in September are pretty consistent with the year-to-date numbers," Goodman said.
But Pepsi is taking careful stock of government attempts to stem the worst crisis since the Great Depression.
"The (commercial paper) market is obviously a volatile one, so it's just something we need to stay on top of," he said.
"Obviously like everybody else we're hoping that the stabilization of the banking system and interbanking lending will help enormously to stabilize the financial situation," Goodman said.
"I'm hopeful that the coordinated global response will work," he said, referring to moves by the governments of nations including Britain, France and Germany and the United States to tackle the credit crisis.