PepsiCo’s earnings boosted by higher prices, healthier drinks and snacks

PepsiCo received a strong boost in earnings as higher prices helped lift first quarter results. The company best known for its Pepsi cola brand said that revenue grew 2% to $12bn in the first three months of the year, while profits jumped 41% to $1.32bn, from $931m in the previous year.

The soda giant said that there was a strong demand for its healthier drinks and snacks and it also kept a lid on costs as selling and administrative expenses fell 5% from the previous year’s period.

We achieved solid revenue growth in the first quarter underpinned by global volume growth and positive net price realization, despite challenging food and beverage industry trading conditions in North America and continued volatility in a number of developing and emerging markets,” said Indra Nooyi, Chairman and CEO of PepsiCo.

Sales for the firm’s flagship North American Beverages and Frito-Lay North America segments both grew 2%, as higher prices offset decline in volume.

PepsiCo said it is working on changing its portfolio of brands to better fit the trend toward options that people feel are healthier. It noted that 45% of its revenue now comes from what it called “guilt-free” products – beverages that have fewer than 70 calories per 12 ounce serving and snacks that have lower amounts of salt and saturated fat.

Elsewhere, PepsiCo reported a 3% sales growth in the Latin American region to $1.08bn, from $1.04bn, helped by productivity gains. In Europe Sub-Saharan Africa region, the company got a 6% sales lift to $1.45bn, again positively impacted by productivity gains. However, the Asia, Middle East & North Africa region (AMENA) suffered a revenue decline of 9%, hurt by higher raw material costs and unfavourable foreign exchange headwinds.

Looking forward, PepsiCo said it expects organic revenue growth of at least 3% in 2017.

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