NEW YORK, Feb 9 – PepsiCo Inc expects to cut 8,700 jobs as part of a plan to save an extra US$1.5 billion (RM4.51 billion) over the next three years, as it invests more money in marketing and advertising its brands.

Its shares fell 2.1 per cent to US$65.30 in premarket trading from yesterday’s close of US$66.74 on the New York Stock exchange.

PepsiCo, maker of Sierra Mist soda, Tropicana juice and Gatorade sports drinks, also reported a better-than-expected fourth-quarter profit and forecast a 5 per cent decline in 2012 earnings.

The moves come as CEO Indra Nooyi (picture) tries to reinvigorate Pepsi’s US beverage business, which has lost market share to archrival Coca-Cola Co. Nooyi has been criticized for taking her eye off the core business of sodas and salty snacks like Fritos and Doritos chips to expand into healthier options such as hummus and drinkable oatmeal.

She defended her choices at a meeting with investors today. “It’s an ‘and’ game, not an ‘or’ game,” Nooyi told investors.

The marketing investment will be focused on 12 brands, including Pepsi-Cola, Lay’s, Gatorade, Tropicana, 7-UP and Doritos.

The 2012 earnings forecast, coupled with an expected hit from currency rates, would mean a bigger step back in earnings from 2011 than expected, Jim Tierney, chief investment officer at W.P. Stewart, said. “But this will take time and we have three to four quarters before we know if it is working.”

“The positive is they are doing something. More ad spending is a positive and costs cuts are encouraging,” he said.

The company said it would increase advertising and marketing spending by US$500 million to US$600 million.

For 2013, PepsiCo expects earnings to grow at a high single-digit rate.

The job cuts, which represent about 3 per cent of PepsiCo’s payroll, will occur in 30 countries, PepsiCo said.

The US$1.5 billion in extra savings is in addition to US$1.5 billion it already planned to save over that period.

PepsiCo also said that Massimo D’Amore, president of its Global Beverages Group, would retire at the end of February.

The company reported a fourth-quarter profit of US$1.42 billion, or 89 cents per share, up from US$1.37 billion, or 85 cents per share, a year earlier.

Excluding items, PepsiCo earned US$1.15 per share, topping analysts’ average estimate of US$1.13 per share, according to Thomson Reuters I/B/E/S. Revenue rose 11 per cent to US$20.2 billion. – Reuters