Key Takeaways:
PepsiCo Inc. (NASDAQ:PEP) reported first-quarter earnings and revenue that topped analyst estimates, as the food and beverage giant’s North American snacks division returned to volume growth after a period of sluggishness.
"PepsiCo is off to a good start this year, and we’re pleased with our first‐quarter results,” CEO Ramon Laguarta said in a statement. “A key strategic objective entering this year was to improve PepsiCo Foods North America volume performance, and the business delivered 2% volume growth in the quarter.”
The company posted adjusted earnings of $1.61 per share on revenue of $19.44 billion for the quarter ended March 21. Analysts had expected earnings of $1.55 per share on $18.94 billion in revenue. The performance was driven by a 2.6 percent increase in organic revenue, supported by a 2 percent rise in volumes in the key PepsiCo Foods North America (PFNA) segment.
Shares of PepsiCo rose 0.62 percent in pre-market trading following the announcement. The results and reaffirmed guidance suggest the company's strategy of product innovation, value-oriented pricing, and productivity savings is gaining traction with consumers, even as the broader food industry faces challenges from inflation and shifting shopping habits.
The rebound in the North American food business was a central theme of the results. Net revenue for PFNA, which includes Frito-Lay and Quaker Foods, grew 2 percent year-over-year to $6.33 billion. Laguarta noted that major brands including Lay’s, Doritos, and Cheetos each delivered volume growth.
The company attributed the improvement to a multi-faceted strategy that includes optimizing prices on multi-packs, launching new products, and restaging iconic brands like Tostitos with simpler ingredients and new marketing. Innovations in the “better-for-you” category, such as Doritos Protein and Smartfood FiberPop, were also cited as key growth drivers.
In contrast, the PepsiCo Beverages North America (PBNA) division saw volumes decline 2.5 percent. However, executives said that excluding the impact of a transition to a third-party manufacturer for case-packed water, volumes would have been flat. The beverage unit still delivered 2 percent organic revenue growth.
PepsiCo’s international business continued to show strong momentum, with executives noting acceleration across multiple regions. Laguarta highlighted the upcoming 2026 FIFA World Cup as a major marketing and innovation catalyst for the summer, with both Lay's and Quaker brands set to feature prominently.
Despite geopolitical uncertainty and potential inflationary pressures, PepsiCo reaffirmed its full-year 2026 guidance. The company continues to expect organic revenue growth of 2 to 4 percent and core constant currency EPS growth of 4 to 6 percent. CFO Steve Schmitt said the company has hedging programs in place and will use productivity gains and strategic pricing to mitigate potential cost increases.
The company’s ability to navigate a challenging environment while investing in its brands suggests its strategic priorities are resonating. The focus on productivity and cost management has provided the flexibility to invest in value and innovation, which appears to be bringing lapsed consumers back to its brands and attracting new ones. Investors will watch the upcoming Q2 results to see if the momentum in the North American food business is sustainable.
This article is for informational purposes only and does not constitute investment advice.
