PepsiCo cuts 2025 profit forecast amid trade tensions and cost pressures

PepsiCo on Thursday cut its annual profit forecast and warned of higher production costs and more volatility from President Donald Trump's on-again off-again trade tariffs. 

Shares fell 2.4 per cent in premarket trading after the Frito-Lay maker also posted its first quarterly profit miss in at least five years. 

PepsiCo now expects fiscal 2025 core earnings per share to decline 3 per cent, compared with its previous forecast of a low-single-digit increase. The company reported earnings per share of $8.16 last year. 

"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," said CEO Ramon Laguarta said in a statement. 

 

The company plans mitigation actions to address the higher supply chain costs where possible, he said, without going into the details. 

PepsiCo and other consumer goods companies are already navigating higher prices for their products following hikes undertaken to offset rising costs initially tied to supply-chain disruptions during the COVID-19 pandemic. 

On an adjusted basis, the company earned $1.48 per share in the first quarter, missing estimates of $1.49, according to data compiled by LSEG. 

US packaged food companies with sprawling international operations are bracing for a hit to earnings from Trump's sweeping tariffs on trading partners as many of them import everything from raw materials to finished goods. 

PepsiCo has two food plants in Mexico and two concentrate plants in Ireland. The 25 per cent US tariffs on steel and aluminum, which came into force in March, could also weigh on the company's margins. 

Organic volumes declined 2 per cent in the first quarter, the company said, as promotions on snacks and sodas take longer to boost demand. 

Laguarta also called out consumer conditions in many markets to remain subdued and have an uncertain outlook. 

The soda and snacks giant's revenue fell 1.8 per cent to $17.92 billion. Analysts on average had estimated $17.77 billion.  (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)