PepsiCo reported mixed results for the first quarter of 2025, with performance reflecting foreign exchange pressures and cost challenges, yet bolstered by solid organic growth in key international markets. Net revenue declined 1.8% year-over-year (YoY) to $17.92 billion on a reported basis, largely due to a 3 percentage point FX headwind. However, on an organic basis, revenue rose 1.2% YoY, underscoring underlying business strength despite global economic pressures.

Net income fell to $1.83 billion, down from $2.04 billion a year ago, while diluted earnings per share (EPS) declined 10% YoY to $1.33, with currency impacts accounting for nearly half that drop. Core (non-GAAP) EPS was $1.48, down 4% in constant currency.

Profitability metrics reflected rising costs. Gross profit held steady at $9.99 billion, but operating profit dipped 5% to $2.58 billion, and operating margin narrowed by 0.5 percentage points to 14.4%. PepsiCo’s core operating profit, excluding certain items, stood at $2.79 billion.

Segment performance was varied. In North America, PFNA (Foods) saw a 1% decline in reported revenue and a 2% decline in organic terms, as a 3% drop in volume offset modest pricing gains. PBNA (Beverages) revenue was flat, but volume slipped 1%, and operating profit fell 10% due to elevated costs and restructuring efforts. Internationally, momentum was stronger: the Europe, Middle East & Africa (EMEA) segment delivered 8% organic revenue growth despite FX and volume headwinds, and the International Beverages Franchise (IB) posted a 7% organic gain driven by 5% volume growth. In contrast, LatAm Foods and Asia Pacific Foods faced revenue pressures, with the latter reporting a 2% drop in net revenue and a 9% decline in operating profit.

By product mix, convenient foods accounted for 58% and beverages 42% of total revenue.

On the cash flow front, PepsiCo reported improved performance, with net cash used in operating activities at $(973) million, and free cash flow of $(1.44) billion, both better than the prior year. The company invested $1.2 billion for the acquisition of Siete, aligning with its growth strategy.

The balance sheet remained stable, with total assets at $101.7 billion, cash and equivalents at $8.27 billion, and total liabilities of $83.2 billion. The company’s annualized dividend was raised 5% to $5.69 per share, marking the 53rd consecutive annual increase, with planned cash returns to shareholders totaling $8.6 billion in 2025.

Looking ahead, PepsiCo lowered its core constant currency EPS guidance to be approximately flat versus the prior year, down from a previous expectation of mid-single-digit growth. The outlook for organic revenue growth remains in the low-single digits, while FX is expected to remain a 3-point headwind. Management cited geopolitical and macroeconomic volatility, particularly around global trade and supply chain costs, as key risks. Strategic priorities include international expansion, productivity initiatives, and continued investment in North America to drive resilience and long-term performance.