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23 Jan 2018
New York, January 23, 2018 -- Moody's Investors Service ("Moody's") today affirmed
the A1 senior unsecured long term ratings of PepsiCo, Inc.
("PepsiCo") and its guaranteed subsidiaries. Moody's
also affirmed PepsiCo's Prime-1 short term commercial paper
ratings. The rating outlook is stable.
RATINGS RATIONALE
PepsiCo's credit profile is supported by its strong snack food and beverage
franchises, extensive global footprint, and solid innovation
pipelines. It is also supported by the company's efficient
operations, and an extensive multifaceted distribution network,
as well as its excellent liquidity and solid financial performance.
These factors are tempered by gross leverage that will remain elevated
until cash can be repatriated, and uncertainties about how tax reform
might lead to shifts in PepsiCo's financial policy. The company's
liquidity is strong, with solid and predictable cash flow,
large cash balances and $7.5 billion in committed bank facilities.
PepsiCo faces challenges to grow its volume in mature carbonated soft
drink (CSD) markets. But this weakness is partially offset by its
strong innovation program and productivity initiatives. It is also
helped by good growth prospects in food and beverage internationally,
and in its Frito-Lay North American snacks segment.
The following ratings were affirmed:
Affirmations:
..Issuer: PepsiCo, Inc.
.... Commercial Paper (Local Currency),
Affirmed P-1
....Senior Unsecured Commercial Paper (Local
Currency), Affirmed P-1
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)A1
....Senior Unsecured Regular Bond/Debenture,
Affirmed A1
..Issuer: Quaker Oats Company
....Senior Unsecured Regular Bond/Debenture,
Affirmed A1
..Issuer: Concentrate Manufacturing Company of Ireland
....Senior Unsecured Commercial Paper,
Affirmed P-1
..Issuer: Pepsi Bottling Group, Inc.
(The)
....Senior Unsecured Regular Bond/Debenture,
Affirmed A1
..Issuer: PepsiAmericas, Inc.
....Senior Unsecured Regular Bond/Debenture,
Affirmed A1
Outlook Actions:
..Issuer: PepsiCo, Inc.
....Outlook, Remains Stable
..Issuer: Quaker Oats Company
....Outlook, Remains Stable
..Issuer: Concentrate Manufacturing Company of Ireland
....Outlook, Remains Stable
..Issuer: Pepsi Bottling Group, Inc.
(The)
....Outlook, Remains Stable
..Issuer: PepsiAmericas, Inc.
....Outlook, Remains Stable
The stable rating outlook reflects Moody's expectation that PepsiCo
will continue to generate solid cash flow. While some changes may
ensue following tax reform, Moody's expects that PepsiCo will
generally maintain conservative financial policies. Moody's
expects that PepsiCo will use some of its overseas cash to repay debt
such that debt to EBITDA will decline to below 3.0x over the next
12 to eighteen months.
PepsiCo's ratings could be upgraded if the company demonstrates
good growth momentum in the North American beverage business and solid
operating performance. The company's ratings could also be
upgraded if the company makes a commitment to maintain debt/EBITDA below
2.5 times and if retained cash flow to net debt approaches 30%.
PepsiCo's ratings could be downgraded if debt/EBITDA is sustained
above 3 times, or 3.25 times when adding its repatriation
tax liability to debt, retained cash flow is sustained below 20%,
EBITA margins fall below 16%, or if the company pursues large,
debt financed shareholder returns or acquisitions.
The principal methodology used in these ratings was Global Soft Beverage
Industry published in January 2017. Please see the Rating Methodologies
page on www.moodys.com for a copy of this methodology.
PepsiCo, Inc. ("PepsiCo"), headquartered
in Purchase, NY, is a world leader in snack foods and beverages.
The company manufactures, markets, and sells a variety of
salty, convenient, sweet and grain-based snacks,
carbonated and non-carbonated beverages and foods. The company
boasts 22 different product lines that each generate more than $1
billion in annual retail sales. These include Pepsi, Diet
Pepsi, Mountain Dew, Aquafina, Tropicana, Cheetos,
Ruffles, Doritos, Fritos, Gatorade, Quaker and
many others. Revenue for the 12 months ended September 2017 was
approximately $64 billion.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
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if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Linda Montag
Senior Vice President
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Peter H. Abdill, CFA
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
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JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
No Related Data.
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