PepsiCo (NYSE:PEP) revealed a stronger-than-expected first-quarter profit on Thursday, led by price increases that gave a boost to sales and helped offset a jump in promotional spending and rising commodity costs.
The company has been lifting prices in an effort to raise cash as part of an effort to accelerate strategic initiatives it hopes will streamline its business and improve its position in the North American drink market.
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Pepsi says those strategic initiatives remain on track for 2012.
The soft drink and snack giant reported net income of $1.13 billion, or 71 cents a share, down slightly compared with a year-earlier $1.14 billion, or 71 cents. Excluding one-time items, it earned 69 cents, beating average analyst estimates in a Thomson Reuters poll by two cents.
Revenue for the three-month period was up 4% to $12.43 billion, topping the Street’s view of $12.36 billion, led by just over a 5 point increase in net pricing globally, partially offset by a 25% increase in media spending and higher corporate unallocated expenses.
"Effective pricing and packaging initiatives drove 5 percent constant currency net revenue growth, allowing us to substantially offset approximately $300 million in commodity cost inflation,” PepsiCo CEO Indra Nooyi said in a statement.
Pepsi continues to anticipate a decline in core earnings per share of about 5% from $4.40 the year earlier. It expects core net revenue to grow in the low-single-digits, a reflection of structural changes and refranchising.
Separately on Thursday, Coca-Cola Enterprises (NYSE:CCE), Coca-Cola's (NYSE:KO) biggest bottler of beverages for Europe, reported stronger-than-expected first-quarter profit and sales, and stood by its full-year outlook.
The bottler also reported a decline in sales volume but said pricing per case was up 5%.