PepsiCo Cuts Profit Forecast to Zero Amid Tariffs, Demand Slowdown

PepsiCo, the global food and beverage giant, has announced a significant revision to its profit growth forecast for the year. The company has withdrawn its previous prediction of a mid-single-digit percentage increase in earnings, citing the dual impact of escalating supply chain costs due to tariffs and a persistent slowdown in global consumer demand. Instead, PepsiCo now anticipates zero growth in profits for the year, measured in fixed currency terms.

In the first quarter, PepsiCo reported a 10.3% year-on-year decline in net profit, amounting to $1.83 billion, with earnings per share standing at $1.33. After adjustments, the earnings per share were $1.48, slightly below the $1.49 expected by analysts. Revenue for the quarter was $17.92 billion, a 1.8% decrease from the previous year, but still exceeding analyst expectations.

PepsiCo's CEO, Ramon Laguarta, outlined three key strategies to mitigate these challenges. The first involves controlling supply chain costs to alleviate the impact of tariffs within operational limits. The second focuses on ensuring operational continuity to minimize disruptions to the production system. The third strategy involves closely monitoring market dynamics, particularly in key regions such as North America and Asia, to prevent further declines in consumer demand.

Analysts have noted that PepsiCo's revised forecast reflects the broader impact of tariffs on supply chains. The imposition of high tariffs by the U.S. government on trading partners has led to significant increases in the costs of packaging materials and logistics. Additionally, the company's performance highlights a trend of consumer downgrading, where consumers in developed markets are increasingly opting for lower-priced alternatives, such as store-brand products.