US food and drink giant PepsiCo was the first global fmcg group out of the traps with its second-quarter results this week, with its performance illustrating the delicate balance between sales growth and the bottom line amid soaring inflation.

The group reported a 13% jump in organic revenues in the three months to 30 June, driven by double-digit growth in every region except Europe (which was up 9%). Growth was aided by a 12% jump in pricing as it passed on inflation to customers, but volumes were also up 1% across the group (up everywhere except Europe).

The higher-than-expected revenue jump saw PepsiCo hike full-year organic revenue forecasts for the second time this year, lifting it from 6%-8% to a 10% full-year jump – higher than Coca-Cola’s forecast of 7%-8% growth.

However, gross margins slipped despite the passing on of double-digit pricing, declining by about 50bps year on year after a broadly flat first quarter, said Bernstein. The broker added the drop “appears to be driven by commodity costs”.

Meanwhile, the Russian invasion of Ukraine led to a one-off $1.4bn impairment, a higher charge than PepsiCo had previously guided towards, which saw net income drop from $2.4bn last year to $1.4bn.

Despite the top-line growth and thinning margins, PepsiCo restated earnings expectations for the year, guiding to core full-year earnings of $6.63 a share, up 6% year-on-year.

Amira Freyer-Elgendy, consumer analyst at GlobalData, said that “shrinking margins and the company’s reliance on markets heavily hit by inflation, such as North America, will be a major hurdle to overcome”.

Bernstein’s Callum Elliott commented: “This is likely to be viewed as something of a bellwether for the rest of the staples group. The omens are good: if PepsiCo’s results are anything to go by, the global consumer remained buoyant in Q2, despite economic doom-mongering from many.”

He noted that price elasticities clearly remain subdued across the world, and in beverages and snacks PepsiCo has been able to leverage its pricing power to take advantage. “Earnings guidance is unchanged, but at this stage that looks like conservatism in our view,” he said.

PepsiCo shares fell back 0.6% on the news to $169.50. The shares remain 8.8% up year on year.