PepsiCo Lowered Food Prices, Tops Earning Expectations

On Thursday, PepsiCo reported its quarterly earnings and revenue that topped expectations of analysts amid a struggling North American food business, per CNBC. 

Earnings Beat Expectations, Sales Climb

Overall, shares rose about 2% in afternoon trading on Thursday. 

Here's what was expected, per CNBC: 

• Earnings per share: $1.61 adjusted vs. $1.55 expected
• Revenue: $19.44 billion vs. $18.94 billion expected

Per CNBC, PepsiCo had first-quarter net income of $2.33 billion, which was about $1.70 per share. Last year, it was $1.83 billion ($1.33 per share). 

Not including restructuring and divestitures, the company earned $1.61 per share. 

Net sales rose by 8.5% to $19.44 billion. The company acquired Poppi, began distributing Alani Nu energy drink, and divested Rockstar. The organic revenue increased by 2.6%.

North American Adjustments and Global Growth

Also, the North American food business had an increase in volume. This particular division had problems with consumers complaining about high prices, and in February, the company vowed to lower them. 

The price cuts came in at about 15%, and they got more shelf space at retailers. It appears that the decision is paying dividends. 

The food business reported volume growth of 2%. That metric excludes pricing and foreign exchange fluctuations, per CNBC. 

“We feel good about where we are at this at this point in the journey,” CEO Ramon Laguarta said on the company’s earnings conference call. “Still, in the process of all the shelf resets and launching the innovation — I would say by the end of Q2, we’d probably be almost completed in that process. But the early reads are quite exciting.”

As for the North American beverage business, volume fell 2.5%. This department includes Starry and Poppi. The demand for these has decreased as prices increase. 

There's also Gatorade, which the company said it would "restage" in an attempt to boost sales. CNBC said that the company will market Gatorade to nonathletes and also release a lower-sugar version and begin removing artificial colors. 

PepsiCo also released other products like Pepsi Prebiotic, Starbucks Coffee & Protein, Doritos Protein, and SunChips Fiber, CNBC said. 

Internationally, PepsiCo's Asia Pacific and Europe, Middle East, and Africa food divisions reported 9% growth.