Amid global demand, higher prices, PepsiCo results beat expectations

PURCHASE, New York: Amid rising international demand for its food and drink products, such as Cheetos and Doritos, and despite a slowdown in the U.S., PepsiCo beat Wall Street expectations for first-quarter revenue and profits on Tuesday.

Jamie Caulfield, CFO of PepsiCo, said, "We have had three years of massive consumer inflation and that has to be absorbed, and I think the cumulative impact of that put a bit of strain on the consumer. But we expect that to abate as time goes on."

In the first quarter, Pepsi's average prices rose five percent in the first quarter, while its organic volume slipped two percent, compared to a drop of four percent in the fourth quarter.

International business accounted for some 40 percent of the company's revenue in the 2023 year, while its North America businesses accounted for the rest.

To drive demand, Pepsi has been expanding its portfolio in developed and emerging markets by launching items, such as flavored Quaker instant oats and Celsius energy drink, said Ramon Laguarta, the company's CEO.

After Quaker products were recalled in December in the U.S. due to a potential salmonella contamination, total sales at the company's Quaker Foods North America unit fell 24 percent.

As the effects of the product recalls ease, PepsiCo expects its North America businesses to gradually improve.

PepsiCo's first-quarter net revenue totaled US$18.25 billion, a 2.3 percent rise, beating LSEG forecasts of $18.07 billion, while its core profit of $1.61 per share beat expectations of $1.52.

Wedbush analyst Gerald Pascarelli said, "This is going to be another year of price-led revenue growth even though pricing has come down."