Pepsico Plans $30-Million Writeoff in Snack-Food Unit

Pepsico Inc. says it may write off as much as $30 million in onetime expenses next quarter for restructuring its European snack-food business.

In a third-quarter report to securities regulators, Pepsico said two additional pretax charges against profits might be necessary in the fourth quarter. Those charges would be due to possible changes at its Kentucky Fried Chicken division and the unprofitability of a small overseas operation.

Analysts said the news did not indicate long-term difficulties for Pepsico, the Purchase, N.Y., company whose divisions include Frito-Lay Inc. and Pizza Hut.

“The bottom line is, they had problems,” said Lawrence Adelman, an analyst and senior vice president with Dean Witter Reynolds Inc. “They’re trying to come to grips with all their problems--whether it be domestic snacks or international snacks or KFC--make the hard decisions in 1991 and go forward with a very positive momentum into 1992.”

Pepsico already has taken a $100.4-million third-quarter charge for consolidation at Frito-Lay and for delays in marketing its new skinless chicken product at Kentucky Fried Chicken until next year.

“During the fourth quarter of 1991, the KFC division will begin a review of its business processes to identify opportunities to improve the efficiency and effectiveness of its domestic and international operations,” Pepsico said in the report filed with the Securities and Exchange Commission.

While the KFC review probably will require a onetime charge, Pepsico said the study hadn’t started yet and thus it could not estimate the size of the possible writeoff.

“KFC does have a way to go. I don’t think that’s any secret, that we have been working on making it more efficient. And that will continue,” said Elaine Franklin, a Pepsico spokeswoman.

Pepsico also disclosed in the quarterly filing a planned study of its international snack-food division. Pepsico said it was “reasonably possible” the uncompleted study will lead to a restructuring of that division, with preliminary estimates of a pretax charge that “would not exceed $30 million.”

Pepsico also said another charge might be included in its fourth-quarter report if it decides by then on what to do about a “small but unprofitable business” in the international snack-foods division. Pepsico did not identify which of its 20-plus foreign snack-food companies was having trouble turning a profit.