PepsiCo has reported its first quarterly earnings miss in at least five years, posting results that fell short of Wall Street expectations in a mixed financial update released on Thursday. For the first quarter of 2025, the global soft drinks and snacks giant recorded adjusted earnings per share (EPS) of $1.48, narrowly missing the consensus estimate of $1.49. This slight shortfall triggered a decline of nearly 2.5% in PepsiCo’s share price during early trading on the same day.
Lauren Lieberman, an analyst at Barclays, commented on the rarity of such a result, saying, “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.” The shares of PepsiCo have experienced a significant decline in value, dropping over 20% in the past year. This downtrend has been attributed to the ongoing impact of financially constrained consumers, who have cut back on snack and soda purchases or opted for cheaper own-label alternatives.
The company’s net revenues diminished by 1.8%, reaching $17.92 billion during the quarter. When excluding acquisitions, disposals, and the effects of foreign exchange fluctuations, organic revenues showed a modest increase of 1.2%. However, organic volumes, which measure sales excluding external factors, declined by 2%. Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, observed, “Price hikes are doing the heavy lifting, with volume growth across its beloved brands like Pepsi, Gatorade, Lay’s and Doritos struggling to gain momentum.”
In response to these results, PepsiCo’s Chief Executive Officer Ramon Laguarta stated in prepared remarks to investors that the company was “taking actions” to enhance performance and restore earnings growth. He elaborated on two key areas where the company intends to focus cost-saving efforts within North America: “optimising and right-sizing our supply chain and go-to-market footprint” and “increasing transportation and logistics efficiencies.” These initiatives are designed to address the often-criticised return on investment from recent spending at PepsiCo’s Frito-Lay snacking division, which Lieberman described as “critical” in light of current financial challenges.
Alongside the earnings report, PepsiCo revised its guidance for the full year. The company now expects earnings per share to remain flat on a constant currency basis, diverging from its earlier forecast of a low-single-digit increase. Despite this, PepsiCo maintained its outlook for a low-single-digit rise in organic revenues, signalling cautious optimism about revenue growth amid prevailing economic uncertainties. The company cited ongoing risks including potential tariffs, unstable economic conditions, and a more cautious consumer base as contributing factors influencing this more conservative outlook.
Source: Noah Wire Services