PepsiCo today (24 April) cut its forecast for its core earnings in 2025, citing the impact of tariffs and increased macroeconomic “volatility”.
The beverage and food giant predicted its “core, constant-currency EPS” would be “approximately even with the prior year”, versus its previous forecast of “mid-single-digit growth”.
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PepsiCo attributed the change to higher supply chain costs related to tariffs, “elevated macroeconomic volatility” and a subdued consumer backdrop.
It expects foreign exchange rates to negatively impact reported net revenue and core EPS growth, based on market consensus rates.
“As we look ahead, we expect more volatility and uncertainty, particularly related to global trade developments, which we expect will increase our supply chain costs. At the same time, consumer conditions in many markets remain subdued and similarly have an uncertain outlook,” PepsICo chairman and CEO Ramon Laguarta said.
“We are actively planning mitigation actions to address these higher supply chain costs where possible, while at the same time being conscious to minimise disruption to our operations, our consumer and customer relationships, and the long-term health of our business.”
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By GlobalDataIn the first quarter, PepsiCo saw its organic revenue rise 1.2%. Net revenue was up 1.8% at $17.92bn.
Operating profit fell to $2.58bn from $2.72bn year-on-year. First-quarter net income declined to $1.84bn from $2.05bn in last year’s first quarter. Earnings per share dropped 10% year on year.
The Gatorade owner’s PepsiCo Beverages North America division saw its revenue dip 1% on an organic basis to $5.91bn. Volumes fell 3%.
Barclays beverages analyst Lauren Lieberman said the results highlight troubles at PepsiCo. “It is exceedingly rare to see PepsiCo results fall short of consensus expectations and, while the miss was just one cent, we think it exemplifies just how challenging things are at the company today given, in the past decade-plus, there’s always been a way to deliver the bottom line.”
She added: “PepsiCo also lowered EPS guidance for the year, calling out higher supply chain costs (tariffs) which shouldn’t have had a meaningful impact on the quarter.”
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