By Ananya Mariam Rajesh
(Reuters) -PepsiCo beat Wall Street expectations for first-quarter revenue and profit on Tuesday as demand for its sodas and snacks like Cheetos and Doritos in international markets drove growth even as it witnessed a slowdown in the United States.
Consumers across Europe, Asia Pacific and China shelled out money for PepsiCo (NASDAQ:)’s pricey sodas and chips, while customers in the U.S. cut back on the products due to strained budgets.
“We’ve 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,” PepsiCo CFO Jamie Caulfield said.
PepsiCo’s average prices jumped 5% in the first quarter. Its organic volume slipped 2%, compared to a 4% drop seen in the fourth quarter.
The company’s international business accounted for about 40% of its total fiscal 2023 revenue, while its North America businesses accounted for the remaining.
The company also maintained its fiscal 2024 forecasts of organic sales growth of 4% and core profit of $8.15 per share.
First-quarter sales at PepsiCo’s largest business, its North America beverage unit, rose 1%, while organic volume fell 5%.
Total sales at its Quaker Foods North America unit fell 24% following Quaker product recalls first made in December in the U.S. due to a potential salmonella contamination.
PepsiCo executives said they expect the company’s North America businesses to gradually improve as impacts associated with product recalls moderate.
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The company’s first-quarter net revenue rose 2.3% to $18.25 billion, beating LSEG estimates of $18.07 billion. PepsiCo’s core profit of $1.61 per share topped expectations of $1.52.
“This is going to be another year of price-led revenue growth even though pricing has come down,” Wedbush analyst Gerald Pascarelli said.
PepsiCo’s shares were down marginally at $176.21 in premarket trading.