PepsiCo, the global snack and beverage giant based in Purchase, New York, reported better-than-expected revenue for the first quarter of the year. The company’s revenue rose 2% to $18.3 billion for the January-April period, surpassing Wall Street’s forecast of $18 billion.
In North America, Frito-Lay revenue increased by 2%, while Pepsi beverage sales grew by 1%. However, the company’s sales were negatively impacted by a recall of Quaker Oats cereal, bars, and snacks early in the quarter due to potential salmonella contamination. As a result, Quaker Foods sales dropped by 24% during the quarter.
Despite the setback in North America, PepsiCo experienced strong international growth, with sales increasing by 11% in Asia Pacific and 10% in Europe. The company’s sales growth in Europe was achieved despite a temporary reduction in the number of products on grocery shelves in some countries. Carrefour, a major European supermarket chain, had pulled PepsiCo products from its stores in France, Belgium, Spain, and Italy in January due to a pricing dispute. However, the two companies resolved their differences, and Carrefour began restocking PepsiCo products in early April.
Over the past two years, PepsiCo has relied heavily on price increases to combat rising ingredient costs. The fourth quarter of 2023 marked the company’s eighth consecutive quarter of double-digit percentage price increases. In the first quarter, however, these increases moderated, with net pricing up 5% globally and volumes falling by 2%. PepsiCo has stated that some of the volume decline is strategic, as the company has been reducing package sizes to meet consumer demand for convenience and portion control.
PepsiCo reported a 5.6% increase in net earnings, reaching $2 billion in the first quarter. Excluding special items, the company earned $1.61 per share, beating Wall Street’s forecast of $1.52. Despite the strong earnings report, PepsiCo shares remained flat in premarket trading on Tuesday.
The Associated Press contributed to this article.