PepsiCo said today that it was expecting a smaller drop in annual profit, helped by a rebound in demand for its energy drinks and healthier soda brands in the US as well as benefits from favourable foreign exchange rates.
The Gatorade maker today reported better-than-expected results for the second quarter. Its shares are down about 11% this year.
PepsiCo, like its rival Coca-Cola, has responded to a shift in consumer demand for healthier drinks and snacks by offering more options, such as its recently acquired prebiotic soda brand Poppi.
It has also launched new flavours of its popular snacking brands, Lay’s and Doritos, to cater to a diverse palate.
The Quaker Oats parent is also trying to offer more products at lower price points to appeal to cost-conscious consumers, after raising prices over the past few years to shield its margins.
PepsiCo’s international business accounted for about 40% of its total net revenue in 2024, and a stronger dollar was expected to dampen PepsiCo’s profits at the start of the year.
However, the dollar has weakened over the past few months, easing some pressure on PepsiCo’s annual core earnings, CEO Ramon Laguarta said in a statement.
The company now expects full-year core earnings per share to fall 1.5%, compared with a 3% decline expected previously.
Analysts’ expectations for PepsiCo were muted heading into the second quarter at a time when tariffs were expected to drive up supply chain costs, and US consumers looked for healthier, more affordable snacking options.
Organic revenue at PepsiCo’s North America beverage unit rose 1% in the second quarter, following a 2% fall in the prior three-month period.
PepsiCo’s second-quarter revenue rose about 1% to $22.73 billion, compared with analysts’ average estimate of a 0.99% decline to $22.28 billion, according to data compiled by LSEG.
Excluding certain impairment charges, PepsiCo earned $2.12 per share, beating estimates of $2.03 per share.
