-- PepsiCo (PEP) reported higher-than-expected fiscal first-quarter results on Thursday amid affordability initiatives, while the beverage and snacks company reiterated its full-year outlook.
Adjusted earnings came in at $1.61 a share for the quarter ended March 21, up from $1.48 the year before, topping the FactSet-polled consensus of $1.54. Revenue improved 8.5% to $19.44 billion, surpassing the Street's view of $18.95 billion. The stock increased 1.1% in the most recent premarket activity.
"We are pleased with our first-quarter results, which featured an acceleration in both net revenue and organic revenue growth," Chief Executive Ramon Laguarta said in a statement. "An extensive commercial agenda, which includes the restaging of large global brands, innovation activity and certain affordability initiatives, is being executed well and business performance improved."
In February, PepsiCo announced plans to cut prices of several snack brands by up to 15%, including Lay's, Doritos and Cheetos. The move came after the company said in December that it was looking to lower prices and eliminate some of its products in the US to boost organic revenue growth following discussions with activist investor Elliott Investment Management.
The company continues to project core EPS to rise by 5% to 7% on revenue growth of 4% to 6% for fiscal 2026. It also reaffirmed its organic revenue guidance of an increase of between 2% and 4%. The Street is looking for non-GAAP EPS of $8.60 and sales of $98.45 billion for the fiscal year.
"As we look ahead, the macroeconomic environment has become more volatile and uncertain because of ongoing geopolitical conflicts," Chief Financial Officer Steve Schmitt said in prepared remarks available on the company's website. "Systematic commodity hedging programs for market traded commodities are expected to provide some near-term protection and visibility on certain input costs."
Overall net pricing had a positive impact of 2% on the topline in the first quarter, while consolidated organic volume was flat. Volume inclined 4% in the convenient food business and was unchanged in the beverages segment.
PepsiCo's North America foods business, which includes Frito-Lay and Quaker Foods, advanced 2% to $6.33 billion. Sales in the North American beverages unit climbed to $6.39 billion from $5.88 billion. International beverages saw revenue jump 9% to $824 million.
"We are encouraged with the resilience of the international business while North America continued to make progress in the first quarter," according to Laguarta. "We aim to successfully execute our commercial plans and tightly manage costs to help fund investments to accelerate growth."