PepsiCo has posted first quarter (Q1) results that exceeded analysts’ expectations, despite the North American drinks business having lost its fizz, thanks to good results from Europe, Sub-Saharan Africa and Latin America.

PepsiCo’s North American Beverages (NAB) was the only of the company’s six segments to experience negative net revenue in Q1 2018.

NAB’s net revenue declined by 1% from $4.46bn to $4.42bn compared with Q1 2017, despite experiencing a 3% volume growth.

The company attributes this to operating cost inflation, higher raw material costs and a bonus paid to US employees as a result of recent amendments to the Tax Cuts and Job Act. This was partially offset by productivity gains, lower marketing expenses and gain on the sale of an asset; PepsiCo claims the latter contributed 3.5% to operating profit performance.

The Europe and Sub-Saharan Africa (ESSA) segment performed best, with a 15% increase in net revenue from $1.45bn to $1.67bn. It benefitted from 10% foreign exchange translation and 6% volume growth in both the food and beverage sectors.

The positive impact of foreign exchange and productivity gains was partly offset by operating cost inflation, higher marketing expenses and higher raw material prices, which reduced operating profit growth by 5%.

Latin America saw a 14% increase in net revenue growth from $1.08bn in Q1 2017 to $1.22bn in Q1 2018. The region benefitted from a 4% boost from foreign exchange and a 5% gain in operating profit growth from insurance settlement recoveries from the 2017 earthquake in Mexico, as well as productivity gains and lower restructuring charges. It also saw 4% volume growth in beverages.

Success was positively offset by cost inflation, higher marketing expenses and higher raw material costs that reduced operating profit growth by 10%.

Net revenue of PepsiCo’s Asia, Middle East and North Africa (AMENA) segment grew by 7% from $970m to $1.037bn. The segment experienced positive growth from productivity gains and favourable foreign exchange translation of 4% and negative growth from operating cost inflation, higher restructuring charges, higher raw material costs and the impact of restructuring its beverage business in Jordan.

Frito-Lay North America (FLNA) reported 3% growth in net revenue compared with the first quarter of 2017 with an increase from $3.50bn to £3.62bn and Quaker Foods North America experienced 0.5% growth in net revenue from $598m to $601m.

Across the whole company, PepsiCo reported a 4.3% growth in net revenue from $12.05bn in Q1 2017 to $12.56bn in Q1 2018. Foreign exchange had a 2% positive impact on net revenue

Net income grew by 2% from $1.32bn to $1.34bn, gross profit also increased 2% from $6.76bn to $6.91bn and operating profit declined by 3% from $1.86bn to $1.81bn. The latter was affected by the bonus extended to US employees.

Earnings per share increased by 3% to $0.94 with foreign exchange having a positive 2% impact.

The company paid less tax in Q1 2018 than in the first quarter of 2017. The 2018 figure was 18.3% for both reported and core tax, compared with 22.7% and 22.5% respectively in 2017.

PepsiCo chairman and CEO Indra Nooyi said: “We generated solid overall results in the first quarter. The majority of our businesses performed very well, including particularly strong performances in our international divisions propelled by accelerated net revenue growth in developing and emerging markets.

“Although we continued to face challenges in North America Beverages, the sector had sequential improvement in top line momentum since the fourth quarter of 2017. We continued investing in and growing share in a number of faster-growing, future-facing categories. However, competitively we recognise the need to step up investments in core carbonated soft drinks, which we intend to responsibly do. We believe our plans will drive further improvement as the year progresses. Importantly, we remain on track to achieve the financial targets we set out at the beginning of the year.”

The company expects full-year organic growth to be in line with the 2017 figure of 2.3% and for foreign exchange translation to have a neutral impact on revenue and earnings per share.

Cash from operating activities is forecast to be $9bn and free cash flow is predicted to be $6bn.