PepsiCo reports solid quarterly earnings despite weaker food and drink sales
PepsiCo reported its second-quarter earnings for this year, reporting stronger revenue growth for the quarter even with consumers in North America cutting back on its food and beverage offerings.
PepsiCo in its released earning reports said it had a net income of US$1.26 billion, down from US$3.08 billion in the same period last year. Second-quarter core earnings per share, which exclude nonrecurring items, fell to US$2.12 from US$3.59 compared to the same period last year.
Revenue for the company grew 1% to US$22.73 billion. Its organic revenue, which excludes acquisitions, divestitures and foreign currency, increased 2.1% during the quarter.
“We’re encouraged by the acceleration in our net revenue growth versus the previous quarter with our businesses effectively navigating through a challenging environment. Our international business momentum continued, while our North America businesses improved their execution and competitiveness in key subcategories and channels,” said chairman and CEO Ramon Laguarta.
“As we look ahead, we will continue to build upon the successful expansion and growth of our international business and accelerate initiatives to improve our North America business performance. These initiatives include more portfolio innovation and cost optimization activities that aim to stimulate growth and profitability. As a result, for fiscal 2025, we remain confident in our ability to deliver low-single-digit organic revenue growth with core constant currency EPS to be approximately even with the prior year. Our core USD EPS outlook has improved versus our previous expectations as foreign exchange headwinds have moderated, due to the weakening of the U.S. dollar.”
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While pleased with the overall growth for the company this quarter, Laguarta along with Jamie Caulfield, executive vice-president and chief financial officer, however, did point so a softening demand for its products in written prepared remarks released along with the quarterly results.
“In North America, despite subdued category demand, we were encouraged to see an improvement in organic volume trends for our convenient foods business as the quarter progressed—with an improvement in our market share trends in key subcategories as we stepped up commercial activities by offering good value to consumers, more-focused innovation activity, and heightened in-market execution,” they said.
“Our North America beverage business also saw an improvement in organic volume trends versus the previous quarter with good performance in trademark Pepsi—led by the continued strength of Pepsi Zero Sugar—resulting in trademark Pepsi market share gains in the carbonated soft drinks and cola categories. During the quarter, we took assertive actions to improve the future profit performance of our North America convenient foods business. These included initiatives to sharpen our marketplace execution and competitiveness while also accelerating our cost optimization programs. We expect our innovation and cost optimization activities to accelerate during the remainder of this year, with performance expected to improve as we exit the year.”
The company added that its Mountain Dew Baja Blast offering continued to build on last year’s highly successful national launch, while Mug Root Beer also saw good momentum, which the company said delivering volume and net revenue growth in the second quarter and year to date.
“In non-carbonated beverages, we gained market share in the sports drink and enhanced water categories year to date, with functional hydration offerings such as Propel continuing to deliver strong volume growth and double-digit net revenue growth in the second quarter and year to date,” they added. “Propel retail sales have more than doubled since 2019 and exceeded US$1 billion in estimated annual retail sales in 2024.”
The company added that it also benefited from its recently expanded partnership with the Subway sandwich chain, “gaining distribution of our beverage portfolio in Subways’ more than twenty thousand North America locations.”
