PepsiCo announced plans today to cut 3,300 jobs and close six plants as it deals with lagging U.S. drinks sales and a surging dollar, which will hurt profits from its rapidly growing international business.
Among the cuts were 20 of the 120 jobs at the company's bottling plant on Old Niskayuna Road in Latham, according to Ozzie Martucci, president of the International Brotherhood of Teamsters Local 669, which represents about 250 Pepsi employees at the Latham plant and a distribution center in Glens Falls.
“They’re not closing here,” Martucci said.
Some of the cuts were likely seasonal cuts, Martucci said, because consumers tend to drink few soft drinks after summer. Pepsi might also be trying to lower operating costs at the Latham facility, where each case of beverages costs more to make than in other areas, he said.
The announcement came as the global snacks and drinks maker reported a 9.5 percent drop in third-quarter profit that missed Wall Street expectations. It also offered a downbeat profit outlook.
The job cuts amount to roughly 1.8 percent of PepsiCo’s global work force of about 185,000 employees. The cuts will affect managerial and factory jobs both in and outside the U.S. Most will be eliminated in the coming months, Chief Financial Officer Richard Goodman said.
The Latham layoffs were announced Friday, according to union officials.
The nation’s second-largest drink maker — which also owns the Frito-Lay, Tropicana and Quaker brands — said the cuts would generate pretax savings of more than $1.2 billion over the next three years. It plans to save $350 million to $400 million in 2009.
“While we can’t control the macro economic situation, we can enhance PepsiCo’s operating agility to respond to the changing environment,” Chief Executive Indra Nooyi said in a statement.
In the third quarter, the company had net income of $1.58 billion, or 99 cents a share, compared with $1.74 billion, or $1.06 per share, a year ago. Revenue grew to $11.2 billion in the most recent period from $10.17 billion a year ago.
Excluding one-time costs, the company earned $1.06 per share, but that still fell short of what Wall Street had expected. Analysts surveyed by Thomson Reuters, who typically exclude items from estimates, expected earnings of $1.08 per share on revenue of $11.2 billion.