Summary
Full summaryThe Print
PepsiCo reported net income of $2.98B ($2.18 diluted EPS) on revenue of $24.18B, with operating profit surging 125% to $4.02B, driven by the absence of prior-year impairment charges.
Operating profit increased 125% primarily due to the absence of prior-year impairment charges related to the Rockstar and Be & Cheery brands.
- Revenue increased 6% YoY to $24.18B, with organic revenue growth of 2%.
- Net income attributable to PepsiCo rose 136% to $2.98B, and diluted EPS increased 137% to $2.18.
- Operating margin expanded to 16.6% from 7.9%, primarily due to the prior-year $1.86B impairment of intangible assets.
Results That Matter
| Metric | Current Period | Prior Period | Change | Investor Takeaway |
|---|---|---|---|---|
Revenue | $24.2B | $22.7B | +6.4% | Revenue increased 6%, reflecting effective net pricing and organic volume growth, partially offset by unfavorable foreign exchange translation. |
Operating income | $4.0B | $1.8B | +124.9% | Operating profit increased 125%, primarily driven by prior-year impairment charges related to the Rockstar and Be & Cheery brands, productivity savings, and effective net pricing. |
Operating margin | 16.6% | 7.9% | +8.7 ppts | Operating margin expanded significantly due to the absence of prior-year impairment charges. |
Diluted EPS | $2.2 | $0.92 | +137.0% | Diluted EPS increased 137%, reflecting higher net income and a slight reduction in diluted shares outstanding. |
Earnings Quality & Cash Conversion
Reported operating profit of $4,023M includes $49M in restructuring charges and a $45M net credit from acquisition/divestiture-related items. Excluding these, core operating profit was $4,067M. Prior-year reported operating profit of $1,789M included $1,860M in impairment charges, $215M in restructuring charges, and $62M in acquisition/divestiture charges. Core operating profit in the prior year was $3,911M. Core operating profit increased 4% YoY.
Value Drivers & Capital Allocation
Capital spending was $819M, down from $904M. Dividends paid were $2,030M ($1.48 per share). Share repurchases were $289M. Free cash flow (operating cash flow less capex plus asset sale proceeds) was $1,617M for the 24 weeks ended June 13, 2026, compared to $(342)M in the prior year period.
Return on equity was 13.5% for the period. Return on assets was 2.7%.
- Dividends declared per share increased to $1.48 from $1.4225.
- Share repurchases of $289M in the quarter.
Forward Signals
cautiousNot disclosed in the provided excerpts.
Known trends
- Management notes that volatile geopolitical conditions, an increasingly complex global tax environment, expanded or retaliatory tariffs, and changes in the interest rate and inflationary cost environment have made estimates and assumptions more difficult to calculate.
Subsequent events
- Subsequent to June 13, 2026, the company entered into Thai baht for U.S. dollar cross-currency interest rate swaps with a total notional amount of $0.3 billion and maturity dates ranging from May 2027 to May 2031, designated as net investment hedges.
“The business and economic uncertainty resulting from volatile geopolitical conditions, an increasingly complex global tax environment, including changes in how existing laws are interpreted or enforced, expanded or retaliatory tariffs and changes in the interest rate and inflationary cost environment have made such estimates and assumptions more difficult to calculate.”
— Management
Risks
No risk factors found
The AI couldn't extract this section from the filing. The company probably didn't report it in a standard format.
Segments
| Segment | Revenue | Operating Income | Change | Commentary |
|---|---|---|---|---|
| PFNA | $6,368M | $1,342M | Revenue -2%, Operating profit -3.5% | Net revenue decreased 2% due to unfavorable net pricing. Operating profit declined 3.5% on operating cost increases and unfavorable net pricing, partially offset by productivity savings. |
| PBNA | $7,243M | $1,053M | Revenue +7%, Operating profit n/m | Revenue increased 7% driven by acquisitions/divestitures and effective net pricing. Operating profit improved significantly due to the absence of prior-year impairment charges. |
| IB Franchise | $1,523M | $637M | Revenue +11%, Operating profit +19% | Revenue growth of 11% from organic volume growth and effective net pricing. Operating profit increased 19% on revenue growth and productivity savings. |
| EMEA | $4,983M | $751M | Revenue +10%, Operating profit +103% | Revenue increased 10% on effective net pricing and organic volume growth. Operating profit more than doubled due to the absence of prior-year impairment charges. |
| LatAm Foods | $2,940M | $616M | Revenue +15%, Operating profit +16% | Revenue increased 15% driven by favorable foreign exchange translation and effective net pricing. Operating profit grew 16% on productivity savings and effective net pricing. |
| Asia Pacific Foods | $1,124M | $127M | Revenue +12%, Operating profit n/m | Revenue increased 12% on organic volume growth. Operating profit improved significantly due to the absence of prior-year impairment charges. |
Balance Sheet & Liquidity
Leverage: Total debt obligations (short-term and long-term) were $53,214M as of June 13, 2026, compared to $49,182M as of December 27, 2025. Cash and cash equivalents were $10,251M. Shareholders' equity was $22,098M.
Liquidity: Cash and cash equivalents of $10,251M, plus $5.0B available under each of the 2026 Five-Year Credit Agreement and 2026 364-Day Credit Agreement, with no outstanding borrowings under either facility.
Working capital: Current assets $32.8B vs. current liabilities $35.1B (current ratio 0.93x). A year earlier: $27.9B vs. $32.8B (0.85x).
Maturities & covenants
- In the 24 weeks ended June 13, 2026, $1.6B of U.S. dollar-denominated senior notes and €0.5B of euro-denominated senior notes matured and were paid.
- The 2026 Five-Year Credit Agreement and 2026 364-Day Credit Agreement each provide $5.0B in borrowing capacity, with no outstanding borrowings as of June 13, 2026.
Notable Footnotes
| Item | Impact |
|---|---|
| Impairment of intangible assets in prior year | In the 12 weeks ended June 14, 2025, the company recorded pre-tax impairment charges of $1,860M ($1,447M after-tax or $1.05 per share), primarily related to the Rockstar brand in PBNA and EMEA segments. |
| Acquisition of poppi and contingent consideration | The fair value of contingent consideration related to the poppi acquisition decreased by $161M in the 24 weeks ended June 13, 2026, to $117M, recorded in selling, general and administrative expenses. |
| New credit agreements | The company entered into a new five-year $5.0B revolving credit agreement and a new 364-day $5.0B revolving credit agreement, replacing prior facilities. |
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AI-generated. Informational only, not investment advice. May be incomplete or contain errors. The authoritative source is always the original SEC filing.