PepsiCo (PEP) Q2 2025 earnings summary

Executive summary

• Net revenue for Q2 2025 was $22.7B, up 1% year-over-year, with organic revenue up 2.1%; operating profit fell 56% due to $1.86B–$1.9B in impairment charges, higher costs, and restructuring expenses.

• Net income attributable to shareholders dropped 59% to $1.26B for the quarter, with diluted EPS at $0.92, down from $2.23 a year ago; core EPS was $2.12, down 5% in constant currency.

• Major impairment charges were related to the Rockstar and Be & Cheery brands, impacting PBNA, EMEA, and Asia Pacific Foods segments.

• Acquisitions of Siete and poppi were completed for $1.2B and $1.95B, expanding the PFNA and PBNA segments.

• Focus on multi-year productivity initiatives, leveraging technology, AI, and data to optimize cost structure and drive growth, especially through North America business integration.

Financial highlights

• Q2 2025 net revenue: $22.7B (+1% year-over-year); YTD net revenue: $40.6B (flat year-over-year).

• Operating profit: $1.8B for the quarter (-56% year-over-year); $4.4B for 24 weeks (-35%).

• Net income attributable to shareholders: $1.26B for the quarter (-59%); $3.1B for 24 weeks (-40%).

• Gross margin for Q2 2025: 54.7%; operating margin: 7.9%.

• Free cash flow for 24 weeks was negative $342M, down from negative $259M a year ago.

Outlook and guidance

• 2025 guidance affirms low-single-digit organic revenue growth and core constant currency EPS roughly flat with prior year.

• Management expects to return approximately $8.6B to shareholders in 2025, with $7.6B in dividends and $1.0B in share repurchases.

• Ongoing productivity initiatives and cost management are expected to continue, with the 2019 Productivity Plan extended through 2030.

• Foreign exchange headwind for 2025 now expected at 1.5 percentage points, improved from previous 3 points.

• High confidence in delivering back-half productivity and mitigating tariff impacts.