The share price of PepsiCo (NASDAQ: PEP), the food and beverage giant, was falling today after the company reported mixed results for its first quarter and cut its earnings forecast for the full year.
PepsiCo is facing rising supply chain costs due to tariffs and slowing consumer spending amid an uncertain macroeconomic environment, the company said today.
As a result, PepsiCo stock was down 4.6% as of 1:04 p.m. ET.
PepsiCo lost its fizz in the first quarter
PepsiCo reported first-quarter revenue of $17.9 billion, which was down 1.8% from the year-ago quarter but still above analysts' consensus estimate of $17.7 billion. But the company missed on earnings, with PepsiCo's adjusted earnings per share (EPS) of $1.48 falling short of Wall Street's expectation of $1.49.
The company's North American business was a main pain point in the quarter, with volume from the company's domestic food business dropping 1% and a decline of 3% from its beverage segment.
Management didn't exactly sound optimistic in its remarks and highlighted "expected higher supply chain costs related to tariffs" and economic uncertainty could negatively impact the company this year. CEO Ramon Laguarta said in a press release: "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. At the same time, consumer conditions in many markets remain subdued and similarly have an uncertain outlook."
The increase in supply chain costs and "subdued" consumer conditions in some markets caused the company to cut its 2025 outlook. PepsiCo still expects "low-single-digit organic revenue growth" but said that core constant currency EPS will be about even from the previous year, down from its previous forecast of "mid-single-digit growth."
More uncertainty ahead
PepsiCo said it's working to address potential supply chain issues and higher costs, but it's unclear what that might look like. The company imports the majority of its concentrate used in North American soda sales from Ireland, which currently has a 10% tariff. The company could also be impacted by a 25% tariff on aluminum, according to The Wall Street Journal.
With PepsiCo's earnings already sliding, and the company cutting its earnings forecast for this year because of tariffs and economic uncertainty, it's likely PepsiCo's stock could face continued volatility in the short term.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
