PepsiCo (PEP) Q1 2025 earnings summary

Executive summary

• Q1 2025 net revenue was $17.9B, down 1.8% year-over-year, with operating profit at $2.6B and net income at $1.83B, both declining due to higher costs, FX headwinds, and commodity pressures.

• Diluted EPS was $1.33 (down from $1.48), and core (non-GAAP) EPS was $1.48 (down 4%); operating margin declined to 14.4%.

• International business remains the primary growth engine, with strong performance in India, Brazil, and Europe, but softness in China and Mexico.

• Major acquisitions included Siete ($1.2B closed) and a pending $1.95B deal for poppi, supporting portfolio expansion.

• Guidance for 2025 was reduced due to tariffs, macroeconomic uncertainty, and subdued FLNA performance.

Financial highlights

• Q1 organic revenue growth was 1%, with international segment delivering 5% organic growth; gross profit was $9.99B, nearly flat year-over-year.

• FLNA experienced a 4% volume decline, while PBNA showed margin improvement and share gains.

• Free cash flow for the quarter was $(1.44)B, reflecting acquisition and capital spending.

• Cash and cash equivalents at quarter-end were $8.3B; total assets $101.7B.

• Dividend per share increased 5% to $5.69 annualized; $1.88B in dividends and $183M in share repurchases returned to shareholders.

Outlook and guidance

• Full-year earnings outlook reduced, mainly reflecting tariffs, consumer uncertainty, and FLNA's slower recovery; core constant currency EPS now expected to be flat year-over-year.

• Top-line guidance reaffirmed, supported by international momentum and scenario planning for tariffs.

• Total cash returns to shareholders in 2025 expected at $8.6B (dividends $7.6B, share repurchases $1.0B).

• High-inflation economies now included in organic sales growth guidance, but impact is immaterial.

• Foreign exchange translation expected to be a 3 percentage point headwind to reported net revenue and core EPS growth.