PepsiCo reported better-than-expected first-quarter revenue thanks to strong international demand for its snacks and beverages.
The New York-based company said its revenue rose 2% to $18.3 billion for the January-April period. This is more than the 18 billion forecast by Wall Street, according to analysts surveyed by FactSet.
Pepsi reiterated its financial guidance for 2024, including organic revenue growth of 4%. The company expects to return to more normal growth rates this year, after several years of inflation-driven price increases.
This may have disappointed investors accustomed to stronger growth at PepsiCo. Last year, for example, internal turnover increased by 9.5%. PepsiCo shares were falling more than 2.5% Tuesday morning.
In North America, Frito-Lay’s revenue increased 2% while sales of Pepsi beverages increased 1%. Sales were hurt by a recall earlier in the quarter of Quaker Oats cereal, bars and snacks due to potential salmonella contamination. Quaker Foods sales fell 24% during the quarter.
However, the company posted sales growth of 11% in Asia Pacific and 10% in Europe.
PepsiCo Chairman and CEO Ramon Laguarta said the company is optimistic that consumer demand will continue this year in the United States and elsewhere.
“We think the consumer, globally, is very resilient,” Mr. Laguarta said during a conference call with investors. This is based primarily on two facts: very low or fairly low unemployment globally and wages are growing at a good pace in the majority of countries in which we participate. »
However, Mr. Laguarta brought a certain reservation. Consumer spending in China remains tepid, he said. PepsiCo is also closely watching low-income consumers in the United States, who are buying fewer snacks or turning to store brands in the face of rising prices.
PepsiCo has relied heavily on price increases over the past two years to combat rising ingredient costs. The fourth quarter of 2023 was the eighth consecutive quarter of double-digit percentage price increases for the company.
These increases moderated in the first quarter. PepsiCo said net prices rose 5% globally during the quarter, while volumes fell 2%.
PepsiCo said part of this volume drop was strategic. The company has reduced package sizes to meet consumer demand for convenience and portion control.
PepsiCo reported that its net profit rose 5.6% to US$2 billion in the first quarter. Excluding one-time items, the company earned US$1.61 per share. This figure is higher than Wall Street’s forecasts, which expected US$1.52.