PURCHASE, NY. — Consumers are accepting higher prices. Issues in supply, labor and transportation are improving. Such positive signs led executives of PepsiCo, Inc. to raise fiscal-year guidance while giving results for the first quarter ended March 25.
Fiscal-year organic revenue now is expected to increase 8%, up from a previous guidance of 6%, while earnings per share in core constant currency are expected to increase 9%, up from a previous guidance of 8%.
“We're seeing both better elasticities than some of the worst-case scenarios we were planning for, and also, we're seeing the teams delivering better productivity,” said Ramon Laguarta, chief executive officer, in an April 25 earnings call.
The flow of materials, the availability of labor and transportation all have improved, he said.
In the quarter net income attributable to PepsiCo was $1.93 billion, equal to $1.40 per share on the common stock, which was down from $4.26 billion, or $3.06 per share, in the previous year’s first quarter. Results in the previous year’s first quarter included a gain of $3.3 billion associated with the divestiture of certain juice brands in North America and Europe.
Net revenue increased 10% to $17.85 billion from $16.20 billion. Organic revenue was up 14%.
PepsiCo’s stock on the Nasdaq closed at $189.71 on April 25, up 2.3% from $185.50 on April 24.
In PepsiCo Beverages North America, net revenue of $5.8 billion was up 8% from $5.35 billion. Organic revenue increased 12% as the Pepsi brand delivered revenue growth in double-digit percentages. Gatorade, Rockstar, Aquafina and Lifewtr increased by high-single-digit percentages.
“We see the momentum in the beverage category, very strong in terms of demand,” Mr. Laguarta said. “We're seeing away from home, very strong. We're seeing the convenience channel, very strong, and we're seeing most of the in-home channels also quite strong.”
PepsiCo will follow a cautious path in the alcoholic beverage category, where it distributes Hard Mtn Dew, a product of the Boston Beer Co.
“Our intention is not to build a large portfolio of products and complex portfolio, but (it) is to focus on a few good brands developed with strategic partners and then leverage our distribution capabilities to give it to consumers all across the country,” Mr. Laguarta said. “That's our journey. We're not rushing.”
Revenue at Frito-Lay North America rose 15% to $5.58 billion from $4.84 billion. Organic revenue increased 16%. Brands such as Lay’s, Doritos, Cheetos and Ruffles rang up revenue growth in double-digit percentages as did smaller emerging brands such as PopCorners, Smartfood and SunChips.
In Quaker Foods North America, revenue of $777 million was up 9% from $713 million. Organic revenue rose 10%. Net revenue growth of double-digit percentages came in oatmeal, light snacks, snack bars, grits and cookie categories.The international business at PepsiCo delivered 15% organic revenue growth. Pepsi Zero Sugar is now available in 110 international markets.