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PepsiCo Second-Quarter Results Top Views; Soft US Spending Hits North American Business

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PepsiCo Second-Quarter Results Top Views; Soft US Spending Hits North American Business

PepsiCo (PEP) reported fiscal second-quarter results above Wall Street's estimates on Thursday, although soft consumer spending in the US weighed on its North American performance.

The beverage and snacks giant posted adjusted earnings of $2.20 a share for the quarter ended June 13, up from $2.12 the year before and surpassing the FactSet-polled consensus of $2.19. Net revenue improved 6.4% to $24.18 billion, topping the Street's view of $23.95 billion.

Revenue grew for global convenient foods and beverages, but a weakening US food and beverage category impacted North American results "with consumer budgets tightening due to rising inflationary pressures," Chief Executive Ramon Laguarta said in prepared remarks.

In North America, volume was flat in the convenient foods business and dropped 4% in the beverages segment. Last week, RBC Capital Markets said PepsiCo's progress in its North American foods business may have stalled due to higher gasoline prices driven by the Middle East conflict.

The stock was down 4.3% in Thursday trading.

Revenue for PepsiCo's North America foods business, which includes Frito-Lay and Quaker Foods, decreased 2% to $6.37 billion, mainly reflecting lower pricing. North American beverage sales climbed 7% to $7.24 billion.

"Our North America business was softer than we anticipated in the second quarter, and we now expect a more gradual improvement in performance trends for the balance of this year," Chief Financial Officer Steve Schmitt said in prepared remarks.

For 2026, the company continues to project core EPS to rise by 5% to 7% on revenue growth of 4% to 6%. It also affirmed its organic revenue guidance that calls for a 2% to 4% rise. The Street is looking for full-year non-GAAP EPS of $8.63 and reported sales of $98.89 billion.

"We're also expecting higher input cost inflation in the second half versus the first half of this year," Schmitt said. "Record productivity savings and refund claims for tariffs paid last year should help mitigate a good portion of the higher costs and investments in the business that aim to accelerate growth."

Price: $136.94, Change: $-5.56, Percent Change: -3.90%

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