PepsiCo (PEP, Financial) has revised its annual profit outlook downward, citing increased production costs and market volatility due to tariffs introduced under former President Donald Trump. The company reported its first quarterly profit miss in over five years, leading to a nearly 1% drop in pre-market trading.
CEO Ramon Laguarta highlighted anticipated supply chain cost increases linked to global trade developments. PepsiCo now expects a 3% decline in core earnings per share for fiscal 2025, contrasting with earlier predictions of modest growth. Last year's earnings per share stood at $8.16. The company plans to mitigate these higher costs by adjusting key raw material sourcing.
The recent 25% tariffs on steel and aluminum, effective since March, could further impact profit margins. Additionally, consumer uncertainty in many markets poses challenges. Both Procter & Gamble and Kimberly-Clark have also lowered profit forecasts due to ongoing trade uncertainties.
PepsiCo's organic sales fell by 2% in the first quarter, with average prices rising 3%. Despite price increases benefiting the company during pandemic-related disruptions, sales growth for popular brands like Pepsi and Gatorade remains sluggish. Adjusted earnings per share for the first quarter were $1.48, slightly below the expected $1.49, while revenue decreased by 1.8% to $17.92 billion, surpassing analyst expectations of $17.77 billion.
