PepsiCo, Inc. 10-Q Summary: 36 Weeks Ended September 6, 2025
Business Context and Reporting Period
This filing covers the quarterly period ended September 6, 2025 (36 weeks), and the 12-week period ended on the same date. PepsiCo operates globally across six reportable segments: PepsiCo Foods North America (PFNA), PepsiCo Beverages North America (PBNA), International Beverages Franchise (IB Franchise), Europe, Middle East and Africa (EMEA), Latin America Foods (LatAm Foods), and Asia Pacific Foods. The company reported a significant decline in operating profit and net income compared to the prior year, primarily driven by large impairment charges and acquisition-related costs.
Key Financial Metrics
| Metric (in millions, except per share) | 36 Weeks Ended 9/6/2025 | 36 Weeks Ended 9/7/2024 | Change |
|---|---|---|---|
| Net Revenue | $64,582 | $64,070 | +1% |
| Operating Profit | $7,941 | $10,637 | -25% |
| Operating Margin | 12.3% | 16.6% | -4.3 pts |
| Net Income Attributable to PepsiCo | $5,700 | $8,055 | -29% |
| Diluted EPS | $4.15 | $5.84 | -29% |
| Operating Cash Flow | $5,468 | $6,220 | -12% |
| Free Cash Flow (Non-GAAP) | $3,241 | $3,547 | -9% |
| Total Debt (Short + Long Term) | $50,849 | $44,306 | +15% |
| Cash and Cash Equivalents | $8,126 | $8,505 | -4% |
Material Changes vs. Prior Period
- Impairment Charges: The company recorded $1.993 billion in impairment of intangible assets for the 36 weeks ended September 6, 2025, compared to only $24 million in the prior year. This was primarily due to the impairment of the Rockstar brand (PBNA, EMEA, IB Franchise) and the Be & Cheery brand (Asia Pacific Foods).
- Acquisition Costs: Acquisition and divestiture-related charges totaled $308 million, a significant increase from $7 million in the prior year, driven by the acquisitions of poppi and Siete.
- Revenue Growth: Net revenue grew 1% year-over-year. Organic revenue grew 1.5%, driven by effective net pricing (+4%) which offset a decline in organic volume (-2%).
- Segment Performance: PBNA operating profit dropped 77% due to Rockstar impairments and poppi acquisition costs. PFNA operating profit declined 7% due to volume declines and cost increases. EMEA operating profit fell 13% due to commodity costs and impairments.
- Debt Issuance: Long-term debt obligations increased by $6.9 billion to $44.1 billion, reflecting new issuances totaling approximately $8.2 billion to refinance maturing debt and fund general corporate purposes.
Guidance, Outlook, and Risks
- Productivity Plan: The 2019 Multi-Year Productivity Plan has been extended through 2030. Total expected pre-tax charges are approximately $6.15 billion. As of September 6, 2025, $3.2 billion has been incurred.
- Shareholder Returns: PepsiCo expects to return approximately $8.6 billion to shareholders in 2025, comprising $7.6 billion in dividends and $1.0 billion in share repurchases. A 5% dividend increase was implemented in June 2025.
- Strategic Transactions: On August 28, 2025, PepsiCo consummated a transaction with Celsius Holdings, acquiring convertible preferred shares and transferring the Rockstar brand in the U.S. and Canada. PepsiCo also entered an exclusive distribution agreement for the Alani Nu brand.
- Risks: Key risks include volatile geopolitical conditions (specifically in Russia, which accounts for 5.5% of revenue and 15% of cash), inflationary cost environments, tariff impacts (contributing to an 8-percentage-point commodity cost impact in Q3), and potential further impairments if business performance deteriorates.
- Tax Environment: The company is monitoring the implementation of the OECD global minimum tax rate of 15% and the U.S. "One Big Beautiful Bill" Act, though neither is expected to have a material impact on the 2025 effective tax rate.
Investor Verification Checklist
- Impairment Details: Verify the specific valuation assumptions and future cash flow projections used to justify the $1.9 billion impairment of the Rockstar and Be & Cheery brands.
- Acquisition Integration: Review the preliminary fair value estimates for the poppi ($1.95 billion) and Siete ($1.2 billion) acquisitions and the associated integration costs.
- Commodity Exposure: Assess the sensitivity of future margins to ongoing tariff impacts and commodity price volatility, particularly in dairy, potatoes, and cooking oil.
- Russia Exposure: Evaluate the liquidity risk associated with 15% of consolidated cash held in Russia and the potential for further currency translation adjustments.
- Productivity Plan Execution: Monitor the remaining $2.95 billion in expected charges for the 2019 Productivity Plan and the timeline for realizing associated cost savings.