PURCHASE, NY. — PepsiCo Inc. lowered its fiscal 2025 earnings guidance in reporting first-quarter results, citing higher expected supply-chain costs related to tariffs and a wary consumer amid increased macroeconomic volatility.
For the full year, Purchase-based PepsiCo now expects earnings per share (EPS) in constant currency to be roughly even with prior-year EPS, compared with its previous forecast for mid‐single‐digit growth. The company upheld its projection for a low-single-digit uptick in organic revenue and a 3% foreign exchange headwind on reported net revenue and core EPS growth.
The updated outlook implies a 3% decrease in core EPS for 2025, versus a low-single-digit gain in the prior guidance, based on fiscal 2024 core EPS of $8.16, according to PepsiCo.
“As we look ahead, we expect a more volatile and uncertain macroeconomic environment, particularly related to global trade developments, which we expect will increase our supply-chain costs,” Ramon Laguarta, chairman and chief executive officer, and Jamie Caulfield, chief financial officer, said in their first-quarter report. “At the same time, consumer conditions in many markets remain subdued and similarly have an uncertain outlook.
“We are actively planning mitigation actions to address these higher supply-chain costs where possible, while at the same time being conscious to minimize disruption to our operations, our consumer and customer relationships, and the long‐term health of our business.”
PepsiCo also plans to “continue building upon the successful long‐term expansion of our International business” and take actions to bolster its performance in North America, Laguarta and Caulfield noted.
For the first quarter ended March 22, net income totaled $1.83 billion, equal to $1.33 per share on the common stock, down from $2.04 billion, or $1.48 per share, a year earlier. Excluding restructuring/impairment and acquisition/divestiture-related charges, core net earnings were $2.03 billion, or $1.48 per diluted share, versus $2.22 billion, or $1.61 per diluted share, in the prior-year period, PepsiCo said. Analysts, on average, had forecast adjusted EPS of $1.49.
Overall net revenue for the quarter came in at $17.92 billion, down 1.8% from $18.25 billion a year ago, but was up 1% on an organic basis.
Mixed results for food, beverages
As of the 2025 first quarter, PepsiCo combined its Frito‐Lay and Quaker Foods convenient food businesses into one reporting unit, PepsiCo Foods North America (PFNA). The business saw operating income edge up 2% to $1.54 billion for the period but, on an adjusted basis in constant currency, fall 7% year over year to $1.58 billion.
The company is combining Quaker Oats with Frito-Lay and creating a North American food business.
| Photo: ©JAMMY JEAN – STOCK.ADOBE.COMThe unit’s net revenue dipped 1% to $6.21 billion yet declined 2% organically on a 3% drop in volume and a 1% rise in net pricing, PepsiCo said.
“Our savory snack performance (primarily Frito‐Lay) remained subdued, partially offset by other convenient foods (primarily Quaker Foods), which delivered strong organic revenue growth, with the business recovering from product recall impacts in the prior year,” Laguarta and Caulfield said in their remarks. “Consumers have remained value‐conscious across brands and channels as the cumulative impacts of inflationary pressures have strained budgets and altered food shopping patterns. Beyond affordability, bold flavor profiles, permissibility, functionality and portion control are key factors in defining value for consumers.”
Food brands Gamesa, Chester’s, Santitas, Baken‐Ets, Munchos and Miss Vickie’s, along with Quaker rice cakes and minis‐canisters, chalked up net revenue growth in the quarter, according to PepsiCo. Certain Quaker‐branded products impacted by the last year’s recall, such as granola bars and some cereals, also performed well, getting a lift from increased distribution and in‐store presence, the company said.
Pepsi Beverages North America (PBNA), meanwhile, had flat net revenue in the quarter at $5.88 billion. On an organic basis, revenue grew 1% on a 2% uptick in net pricing and a 1% decrease in volume.
“The business continues to sharpen its focus on attractive segments like zero sugar, functional hydration and sports nutrition and concentrate resources on fewer, larger‐scale initiatives, such as the successful national rollout of Mountain Dew Baja Blast in 2024 and our ‘Food Goes Better With Pepsi’ campaign in 2025,” Laguarta and Caulfield said.
PBNA improved its marketplace performance and generated strong productivity savings during the quarter, delivering core profitable growth, the executives added.
“Encouragingly, our Pepsi brand gained market share in the carbonated soft drinks category and delivered solid net revenue growth, led by the continued strength of Pepsi Zero Sugar,” they said. “In addition, Gatorade gained market share within the sports drink category, led by Gatorade Zero, while functional hydration offerings such as Propel delivered good net revenue growth.”
Unclear macroeconomic picture
In a conference call with analysts on April 24, Caulfield said the fluid tariff situation was just one reason PepsiCo decided to prune its earnings outlook.
“The rationale behind the guidance adjustment that we announced is really driven by three things that, in a number of ways, are a little bit related to one another,” he said. “The first is tariffs. We’ve factored in what we know about tariffs today and we factored in mitigation plans, which we continue to work. Some of those we'll be able to execute more quickly. Some of those will take more time to execute. The second is just the heightened macro and consumer uncertainty. I’m sure you saw the Consumer Confidence Index that’s really nosedived. So, relative to where we were three months ago, we probably aren’t feeling as good about the consumer now as we were a few months ago.”
The third factor is Frito-Lay’s “subdued performance,” which is related to the changing consumer environment, Caulfield said.
“We’ve got clear plans to continue to turn the business around, but that’ll take a little while,” he noted.
Responding to an analyst question, Laguarta shed more light on PepsiCo’s move to meld Frito-Lay and Quaker Foods into one North America foods business unit.
“Quaker has been part of the food business now for a couple of years, so we’re just recognizing something that is the way we’re thinking about and running the business,” he said. “And then, the beverage business continues to be separate.”
The formation of PFNA is focused “not on the reporting, it’s more on the operating,” according to Laguarta.
“Now what we’re adding in North America, it’s a North America integration opportunity, both from running the business more efficiently in the short term but, most importantly, about how we can grow the business in a different way in the future, especially as we look at common infrastructure for some of our supply chain or some of our go-to-market models for particular channels, where I think the scale could give more value than the separation,” he said. “That’s how you should be thinking about why we've made some of these changes.”
