PepsiCo Inc. sold more of its snacks and drinks in the first quarter to help deliver earnings that met Wall Street's expectations.
The maker of Frito-Lay snacks, Tropicana juice and other products, however, says it is still struggling with higher commodity costs and the impact of a tough economy and reiterated its soft full-year earnings outlook.
PepsiCo's earned $1.14 billion, or 71 cents per share, for the quarter. That's down 20 percent from the $1.43 billion, or 89 cents per share, last year, due largely to a gain in the prior year.
Adjusting for that and other special items, the company posted a more modest 2 percent decline from 76 cents per share last year to 74 cents per share, meeting analyst expectations as polled by FactSet.
Revenue rose 27 percent to $11.94 billion, surpassing analysts' $11.84 billion expectations.
PepsiCo's performance got a boost from the acquisition of two of its biggest bottlers and Russian dairy and juice company Wimm-Bill-Dann Foods. And consumers gobbled up more of its goods across most of its other lines, such as Doritos, Pepsi Max and Gatorade. Its worldwide snacks sales volume climbed 3 percent, while beverage sales volume increased 12 percent.
The company said its performance was pressured by higher commodity costs and that it spent more on product development, marketing and infrastructure in emerging markets.
PepsiCo, like many of its peers, is struggling with higher costs for inputs such as oil, corn and wheat. The company said it plans to offset these costs with improved productivity and higher prices for the products it sells.
PepsiCo already began raising some prices in the past two quarters and says it has more increases coming this year. Company leaders would not disclose the size or scope of these increases but said consumers remain sensitive to any higher costs.
"Obviously in the environment we're in right now, we have to look at these things very carefully," Hugh Johnston, PepsiCo's chief financial officer told investors Thursday.
The company said it would not raise prices enough to cover all its commodity cost increases for the year.
PepsiCo said that those higher costs, the tough economy and ongoing investments in emerging markets and brands are factored into its full-year outlook. The company reiterated its expectation that its full-year earnings would rise between 7 percent and 8 percent, implying earnings of $4.42 to $4.46 per share. Analysts expect $4.48 per share.
Shares of PepsiCo, which is based in Purchase, New York., rose 75 cents to $68.68 in midmorning trading.
AP Retail Writer Michelle Chapman contributed to this report from New York.