Advertisement
New Zealand markets closed
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NZD/USD

    0.5972
    -0.0003 (-0.05%)
     
  • NZD/EUR

    0.5539
    +0.0006 (+0.10%)
     
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD

    2,254.80
    +16.40 (+0.73%)
     
  • NASDAQ

    18,254.69
    -26.15 (-0.14%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • Dow Jones

    39,807.37
    +47.29 (+0.12%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,341.41
    +173.34 (+0.43%)
     
  • NZD/JPY

    90.3440
    -0.0490 (-0.05%)
     

PepsiCo CEO Says She’s Never Seen Global Economy This Bumpy

PepsiCo CEO Indra Nooyi has been around the block in her decades at the top of American business.

So when she says the world economy and the stock markets are creating the bumpiest environment she has ever seen, she has a good deal of credibility. Her company, the maker of countless consumer products from Pepsi soda to Gatorade sports drink to Frito Lay chips, reported a higher-than-expected profit for the last quarter of 2015, helped by brisk sales for snacks and beverages in the U.S.

But business in the rest of the world was tougher, made difficult by a combination of depressed oil prices, insane stock markets, and the strong U.S. dollar. There are also abundant geopolitical tensions, such as discord in the European Union over refugees and frictions between Russia and Turkey, which are dampening consumer confidence.

“Over my several decades in business, I’ve never seen this combination of sustained headwinds across most economies, combined with high volatility across global financial markets,” Nooyi, CEO since 2006, told Wall Street analysts on Thursday on a call to discuss PepsiCo’s quarterly results. “Traveling the world, I’ve noted slowing growth or recession across all but the United States.”

ADVERTISEMENT

The slowing global economy is depressing demand for oil, which in turn is slamming energy-dependent economies like Canada, Russia, and Brazil, pinching demand for PepsiCo’s products there. And that is also bolstering the U.S. dollar, which worsens a growing problem for PepsiCo and other major U.S. multinationals: International profits translate into fewer U.S. dollars. On the bright side, Nooyi said, with a note of caution, that the Chinese market has been holding up so far in 2016. (Other consumer companies including J&J and Procter & Gamble recently said China had been a tough market.

Still, though the U.S. economy has held up relatively well--the unemployment has now fallen below 5%--it’s not immune from the rest of the world’s problems.

“While the U.S. economy is experiencing a recovery, it’s delicate and there is a risk that it will not sustain itself if the rest of the globe continues to experience such massive pressures,” Nooyi warned the analysts.

And that might be why, despite a big share buyback announcement, PepsiCo’s shares fell (though less than the broader stock market) on Thursday, despite pretty strong results.

See original article on Fortune.com

More from Fortune.com