PepsiCo (NASDAQ:PEP) reported better-than-anticipated revenue in the first quarter driven by robust international demand for its snacks and beverages.
The Purchase, New York-based company disclosed a 2% increase in revenue to $18.3 billion for the January-April period, surpassing the $18 billion Wall Street forecast, according to analysts polled by FactSet.
PepsiCo reaffirmed its financial guidance for 2024, including organic revenue growth of 4%. The company anticipates returning to more normal growth rates this year after experiencing several years of inflation-induced price hikes.
However, this projection may have disappointed investors accustomed to stronger growth at PepsiCo. Last year, for instance, organic revenue grew by 9.5%. Consequently, PepsiCo’s shares declined by more than 2.5% during morning trading on Tuesday.
In North America, Frito-Lay revenue increased by 2%, while Pepsi beverage sales saw a 1% rise. Sales were affected by a recall of Quaker Oats cereal, bars, and snacks early in the quarter due to potential contamination with salmonella, resulting in a 24% decline in Quaker Foods sales.
Conversely, the company experienced 11% sales growth in Asia Pacific and 10% sales growth in Europe.
PepsiCo Chairman and CEO Ramon Laguarta expressed optimism regarding rising consumer demand in the U.S. and other regions this year.
Laguarta stated during a conference call with investors that the consumer, globally, is very resilient. He noted two supporting factors: very low unemployment or quite low unemployment globally and wages growing at a good pace in the majority of the countries where they participate.
In Europe, sales were bolstered by demand in Eastern Europe, although Western Europe saw fewer PepsiCo snacks and drinks on grocery shelves during the quarter due to a pricing dispute with Carrefour, one of Europe’s largest supermarket chains.
PepsiCo reported double-digit organic revenue growth in Mexico, Brazil, Egypt, Pakistan, China, and Australia.
However, Laguarta cautioned about cautious consumer spending in China and the purchasing behavior of lower-income consumers in the U.S., who are either buying fewer snacks or switching to store brands due to higher prices.
PepsiCo has heavily relied on price increases over the past two years to offset rising ingredient costs. However, the first quarter of 2024 saw a moderation in these increases, with net pricing up 5% globally while volumes fell by 2%.
The company reported a 5.6% increase in net earnings to $2 billion in the first quarter. PepsiCo earned $1.61 per share excluding special items, surpassing Wall Street’s forecast of $1.52.
Featured Image: Unsplash
Author Faith Yakubu 
