Dive Brief:
- PepsiCo expects tariff refunds it has claimed to yield about one percentage point of earnings-per-share growth this year, giving the company a needed boost as it manages higher costs and changing consumer spending patterns, CFO Steve Schmitt said during a Thursday earnings call.
- The beverage and snacks giant reported second-quarter net revenue of $24.2 billion, up 6.4% year over year, with core EPS of $2.20, up 4%. While the company reaffirmed its 2026 outlook, profitability and demand trends remained mixed, with core operating margin down 40 basis points to 16.8% and North America convenient foods revenue declining. PepsiCo also expects higher input cost inflation in the second half of the year.
- “We do expect some more pressure on the business from a commodity standpoint,” Schmitt said on the company’s second-quarter earnings call. “We also expect refund claims for tariffs paid last year to help offset some of the commodity pressures that we have and allow us to continue to play offense.”
Dive Insight:
CFO optimism about the U.S. economy edged lower in the second quarter as energy price shocks pushed inflation back to the top of finance chiefs’ concerns, according to a recent report from Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta.
PepsiCo executives said higher gasoline prices have affected consumer behavior by reducing discretionary spending, particularly in convenience channels.
“I think, obviously, the Iran war and the impact on gas prices has been meaningful, not only in the U.S., but across the world,” CEO Ramon Laguarta said during the Thursday earnings call.
The company is focused on affordability as a growth strategy in the U.S. That means making sure its brands “are in consumers' lives in the portions and prices that consumers can afford today,” Laguarta said.
Schmitt said PepsiCo expects “a gradual improvement in North America” as the company uses its tariff refunds to help offset commodity inflation. “That's how we're thinking about that,” he said.
The company didn’t immediately respond to a request for further details on its refund claim.
