Investing.com -- PepsiCo Inc (NASDAQ:PEP) has hiked its annual profit guidance after price rises helped the U.S. food and beverage company overcome a jump in input expenses to post better-than-expected first-quarter earnings.
The company behind brands like Pepsi fizzy drinks and Frito-Lay potato chips said it now expects to deliver 9% core constant currency earnings per share growth in its 2023 financial year, up from its prior outlook of 8%. Organic revenue is also seen rising by 8%, instead of the previous projection of 6%.
“We are very pleased with our performance and business momentum as our categories and geographies remained resilient during the first quarter," said chairman and chief executive officer Ramon Laguarta in a statement.
PepsiCo and rivals like Coca-Cola (NYSE:KO) have been hit by surging costs for raw materials and labor that were 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.
To offset this trend, PepsiCo has increased the prices it charges for its items. According to NielsenIQ data cited by Reuters, quarterly average selling prices moved up by 16%. However, PepsiCo pledged in February to not raise prices further, stepping away from a strategy adopted by Coca-Cola.
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.
Shares in PepsiCo moved up by over 1% in U.S. premarket trading on Tuesday.