PepsiCo grows organically in a challenging Q1 2025

Overview

PepsiCo’s first-quarter 2025 results reflected resilience amid a challenging macroeconomic environment marked by currency pressures, global trade uncertainties, and subdued consumer demand in many markets. Despite a modest revenue decline on a reported basis, the company delivered positive organic growth and maintained strong profitability.

Chairman and CEO Ramon Laguarta highlighted: “Our businesses remained resilient in the midst of increasingly dynamic and complex geopolitical and macroeconomic conditions in the first quarter. 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.”

Q1 2025 vs. Q1 2024:

Reported net revenue recorded a value of $17.9bn (-2% YoY), declined primarily due to a 3-percentage-point negative foreign exchange (FX) impact.
- PepsiCo Foods North America (PFNA) revenue declined -1% YoY, while operating profit was up +2%, driven by stable snacks performance, though volume pressure persisted from cautious consumer spending.
- PepsiCo Beverages North America (PBNA) revenue was flat YoY, while operating profit was down -10%, influenced by higher supply chain costs and lower volume pressured margins despite pricing initiatives.
- International Beverages Franchise (IB Franchise) revenue grew +3% YoY, with strong pricing actions and volume gains in emerging markets drove growth.
- Europe, Middle East and Africa (EMEA) revenue declined -2% YoY, led by volume pressures partially offset by effective net pricing and operational efficiencies.
- Latin America Foods revenue declined -12% YoY, challenged by FX translation impacts, although local currency performance remained positive.
- Asia Pacific Foods revenue declined -2% YoY, driven by volume softness in certain geographies moderated by stable demand in premium categories.
Organic revenue growth was +1.2% YoY, led by strong pricing actions, particularly in international markets, partially offset by volume softness in North America.
GAAP EPS decreased to $1.33 (-10% YoY), driven by FX headwinds, higher supply chain costs, and increased restructuring and impairment expenses.
Core EPS (non-GAAP) was $1.48 (-4% YoY constant currency), reflecting resilience operational execution offsetting much of the external pressures.
Operating profit declined to $2.58bn (-5% YoY), impacted by higher supply chain costs and a challenging cost environment, partially offset by productivity gains.
Net income also decreased to $1.84bn (-10% YoY), reflecting the problems the company faced in the Q1 2025.
Net cash used for operating activities was negative, at -$973M, mainly due to seasonal working capital timing and increased investments in restructuring initiatives.

PepsiCo updated its full-year 2025 outlook to reflect ongoing global volatility and rising supply chain costs. The company continues to expect low-single-digit organic revenue growth for the year. However, core constant currency EPS is now anticipated to be approximately flat compared to the prior year, a revision from the previous mid-single-digit growth target. Total expected cash returns to shareholders remain around $8.6bn, consisting of approximately $7.6bn in dividends and $1.0bn in share repurchases. The updated guidance also incorporates an expected foreign exchange headwind of about three percentage points, implying a roughly 3% decline in core EPS on a reported basis compared to 2024.

After reporting its first-quarter results this year, PEP’s share price experienced a significant decline over the weekend, ending the trading week down approximately -6.4%. The decline has also been quite noticeable since the beginning of this year, with PEP’s share price down over -11% as of this writing. In addition, since early April, when President Donald Trump announced a series of tariffs on most countries in the world, which were later postponed, the company’s share price has been below its 50-day moving average, reflecting a persistent negative sentiment among investors that appears to have persisted since the fall of last year.