PepsiCo raises full-year income outlook as Q1 earnings beat estimates

After price increases enabled the American food and beverage business to offset an increase in input costs and report better-than-expected first-quarter results, PepsiCo Inc. increased its annual profit guidance.

The firm that owns brands including Pepsi carbonated beverages and Frito-Lay potato chips announced that it has raised its previous expectation from 8% to 9% core constant currency earnings per share growth for the fiscal year 2023. In addition, organic revenue is anticipated to increase by 8% rather than the previously predicted 6%.

“We are very pleased with our performance and business momentum as our categories and geographies remained resilient during the first quarter,” said chairman and chief executive officer Ramon Laguarta in a statement.

Increased prices for labour and raw materials, which were partly caused by post-pandemic supply limitations and the start of the war in Ukraine, have hurt PepsiCo and rivals like Coca-Cola. Selling, general, and administrative costs increased by over a tenth to $7.23 billion in the 12 weeks that ended on March 25.

PepsiCo has raised the prices it charges for its products in an effort to buck this trend. Reuters cited NielsenIQ data that showed a 16% increase in quarterly average selling prices. In contrast, PepsiCo promised in February not to increase prices any more, departing from a tactic used by Coca-Cola.

Three-month core earnings per share at PepsiCo gained more than 16% to $1.50, topping Bloomberg consensus estimates of $1.38, while net revenue of $17.85 billion also beat projections.