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Investing.com - PepsiCo (NASDAQ:PEP) has slashed its full-year profit outlook, as the soda and snacks group flagged that consumer spending may be hit by tariff-fueled economic uncertainty.
Shares in the Frito-Lay owner have been under pressure as analysts fret over the risks posed by U.S. President Donald Trump’s elevated -- and now partially delayed -- levies on most countries. Unlike rival Coca-Cola (NYSE:KO), Pepsi makes most of its concentrate outside of the U.S., leaving its supply chain possibly exposed to the duties.
Meanwhile, worries that the tariffs could fuel inflation and weigh on economic growth have led to a deterioration in consumer sentiment, potentially signalling that many shoppers may opt for cheaper options in a bid to protect their pocket books.
"[W]e expect more volatility and uncertainty, particularly related to global trade developments, which we expect will increase our supply chain costs," said CEO Ramon Laguarta in a statement.
"At the same time, consumer conditions in many markets remain subdued and similarly have an uncertain outlook.”
Against this backdrop, Pepsi said it now expects annual core constant currency earnings per share to be approximately even with the prior year, down from its previous projection for mid-single-digit growth. It is also anticipating a foreign exchange headwind of around 3 percentage points to negatively impact reported net revenue and core per-share income expansion.
"This assumption and the guidance above implies a 3 percent decline in core earnings per share in 2025 (previously a low-single-digit core EPS increase) compared to 2024 core EPS of $8.16," Pepsi said.
For the first quarter, Pepsi reported operating profit of $2.58 billion, a 4.9% decline from a year ago. Analysts had expected $2.78 billion.
Net revenue fell by 1.8% to $17.92 billion, versus estimates of $17.77 billion.
Shares in Pepsi were lower in premarket U.S. trading on Thursday.