PepsiCo faces risks from the Ukraine conflict, fluctuating commodity prices (especially transportation and labor), international currency fluctuations (especially the Egyptian pound, Mexican peso, Brazilian real, and Russian ruble), potential new or increased taxes and regulations on products, and the global minimum tax. Supply chain disruptions, retail landscape changes, and potential credit rating downgrades also pose risks. The company's 2019 productivity plan, while having some upside, also carries significant restructuring and impairment charges.
Financial Upside
PepsiCo's 2019 productivity plan, while costly, aims to simplify and automate processes, re-engineer systems, and optimize operations. The company has issued new debt, including a five-year unsecured revolving credit agreement and a 364-day unsecured revolving credit agreement, which could provide financial flexibility. Acquisitions, like the planned acquisition of Siete Foods, represent potential future revenue growth. Positive organic volume growth in some divisions, and effective net pricing, also offer potential upside.
