PepsiCo lowers full-year earnings forecast on tariff costs and lower consumer spending

PepsiCo lowered its full-year earnings expectations Thursday, citing increased costs from tariffs and a pullback in consumer spending.

The maker of Pepsi beverages and Frito-Lay snacks also said Thursday it plans to accelerate a shift to natural flavors and colors in its food and drinks. Earlier this week, U.S. health officials — including Health Secretary Robert F. Kennedy Jr. — urged companies to phase out petroleum-based artificial colors.

PepsiCo CEO Ramon Laguarta said 60% of PepsiCo's business is already free of artificial colors, and the Lays and Tostitos brands will phase them out by the end of this year. He said the company plans to phase out artificial colors — or at least offer consumers a natural alternative — over the next few years.

“We stand by the science. Our products are very safe and there’s nothing to worry about,” Laguarta said in a conference call with investors. “But we understand that there’s going to be, probably, a consumer demand for more natural ingredients.”

PepsiCo said it now expects its adjusted earnings per share to be even with last year, when it reported a full-year adjusted profit of $8.16 per share. Previously it expected mid-single-digit percentage growth.

A 25% tariff on imported aluminum is among those hitting PepsiCo and other beverage makers.

But PepsiCo is also more vulnerable than some rivals because it makes much of its concentrate for the U.S. market in Ireland, which is now subject to a 10% tariff. Rival Keurig Dr Pepper, which makes concentrate for the North American market in St. Louis and Ireland, reaffirmed its full-year adjusted earnings guidance Thursday despite tariff pressures.

“We’ve factored in what we know about tariffs today, and we factored in mitigation plans," PepsiCo Chief Financial Officer Jamie Caulfield said Thursday in a conference call with investors. “Some of those will be able to execute more quickly. Some of those will take more time to execute.”

The company didn't provide details of how it plans to mitigate tariffs.

PepsiCo said in February that years of double-digit price increases and changing consumer tastes had weakened demand for its snacks and drinks. Caulfield noted that U.S. consumer confidence has only worsened since then.

“We probably aren’t feeling as good about the consumer now as we were a few months ago,” Caulfield said.

The company has responded by investing more heavily in value brands, like Chester's and Santitas, and adding more promotions and value packs. It also burnished its health credentials last month by purchasing Poppi, a popular prebiotic soda brand, for $1.95 billion.

PepsiCo said it expects “elevated levels of volatility and uncertainty” for the rest of this year. Geopolitical tensions are impacting sales in some markets, the company said. Sales in China have been lagging, but India and Brazil were bright spots in the first quarter.

PepsiCo’s net revenue fell 1.8% to $17.9 billion in the first quarter as its sales volumes dropped around the world. That was slightly higher than the $17.8 billion Wall Street was expecting, according to analysts polled by FactSet.

The Purchase, New York, company’s net income fell 10% to $1.8 billion. Adjusted for one-time items, PepsiCo earned $1.48 per share. That was slightly lower than the $1.49 analysts forecast.

Shares of PepsiCo slipped 3% in morning trading Thursday.

FILE - Plastic bottles of Pepsi are displayed at a grocery store in New York on Nov. 15, 2023. (AP Photo/Ted Shaffrey, File)

WASHINGTON (AP) — Alexander Nikishin took the ice helmetless for warmups prior to Game 5 of the Carolina Hurricanes' second-round series at Washington and skated the customary solo lap for a player making his NHL debut.

While it meant bad news of injured defenseman Jalen Chatfield not being available, Nikishin got to go from playing in Russia all season to jumping into the middle of the playoffs. The organization's top prospect skated 10 1/2 minutes as Chatfield's replacement on the blue line and drew strong reviews from teammates and coach Rod Brind'Amour for how he handled the situation.

“I don’t know that there’s a tougher spot to throw a kid in, especially when there’s such a language barrier,” Brind'Amour said. “I thought he did all right. We got a little fortunate on the one that was offside because he turned that one over and had it on his tape, but he hung in there. And you can see he’s going to be a good player for us, and he’s got a bright future.”

Nikishin was spared of being on the wrong end of a Capitals goal because it was taken off the board on a coach's challenge for offside. He was steady in most of his 16 shifts Thursday night.

“I thought he was great,” veteran defenseman Sean Walker said. "He’s a big body, he skates well, he shoots the puck well. He really ended some plays in the D zone and in the O zone you see he can get a pretty good shot off. It was great to see.”

Brind'Amour and Walker credited Dmitry Orlov and the Hurricanes' other Russians for helping the 23-year-old new to North America adjust as well as possible. Nikishin left the KHL earlier this spring and signed his first NHL contract last month.

“I was so nervous whenever a Russian guy comes and starts playing, but I tried to give him a couple advices and I think he did a great job,” said Svechnikov, who scored the go-ahead goal in a series-ending 3-1 victory. "I couldn’t imagine just coming from Russia and playing a playoff game. It must be so hard. But he did a great job. I’m very proud of him.”

Chatfield appeared to tweak something late in Game 4. The team announced early in warmups that Chatfield would not play in Game 5 because of an undisclosed injury.

“That was just a huge guy to have out,” Brind'Amour said. “Hopefully he can recover in however many days that we have here.”

Carolina will face either Florida or Toronto in the Eastern Conference final. Walker, Orlov, Jaccob Slavin, Shayne Gostisbehere and Brent Burns played some extra minutes in Chatfield's absence Thursday night but would love to have him in the lineup for the opening game of the third round.

“We really miss Chatty,” Walker said. "He’s a big part of our D corps back there, so we’ll be excited to have him back.”

AP NHL playoffs: https://apnews.com/hub/stanley-cup and https://apnews.com/hub/nhl

Carolina Hurricanes defenseman Alexander Nikishin (21) skates with the puck past Washington Capitals right wing Tom Wilson (43) in the first period of Game 5 of a second-round NHL hockey playoff series Thursday, May 15, 2025, in Washington. (AP Photo/Nick Wass)

Carolina Hurricanes defenseman Alexander Nikishin (21) warms up before Game 5 of a second-round NHL hockey playoff series against the Washington Capitals Thursday, May 15, 2025, in Washington. (AP Photo/Nick Wass)