PepsiCo raises annual profit guidance as Q1 earnings beat estimates

The company has increased the prices of its products to offset the surging costs of raw materials and labor that have been linked in part to post-pandemic supply constraints and the outbreak of the war in Ukraine. In the 12 weeks ended on March 25, selling, general and administrative expenses climbed by nearly a tenth to $7.23 billion.

However, PepsiCo pledged in February to not raise prices further, stepping away from a strategy adopted by rival Coca-Cola. The decision not to raise prices further may also benefit the company in the long run, as it avoids putting a strain on consumer loyalty and provides a competitive edge over rival Coca-Cola

According to NielsenIQ data cited by Reuters, quarterly average selling prices of PepsiCo moved up by 16%. 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.

As a result of its strong financial performance, PepsiCo has hiked its annual profit guidance for 2023, expecting 9% core constant currency earnings per share growth and 8% organic revenue growth, up from its previous guidance of 8% and 6%, respectively.

Despite the challenging business environment, PepsiCo has shown strength in its performance, with core earnings per share and net revenue surpassing expectations. The price hikes for its products have helped the company offset the rising input expenses, which have been attributed to post-pandemic supply constraints and geopolitical instability.

Overall, PepsiCo's first-quarter results demonstrate resilience and adaptability in the face of challenging circumstances.