PepsiCo Inc. (PEP  ) said higher gasoline prices, partly driven by geopolitical tensions, weighed on consumer spending during the second quarter, particularly in convenience stores where impulse purchases slowed. During the earnings call, management said consumers continued to visit convenience stores but were less likely to make purchases as higher fuel costs pressured discretionary spending.

The comments followed the company's mixed second-quarter results released Thursday. Revenue rose 6.4% year over year to $24.18 billion, topping analysts' estimate of $23.96 billion. However, core earnings of $2.20 per share missed the consensus estimate of $2.21 per share.

PepsiCo First Half Results

PepsiCo delivered 7% revenue growth in the first half of 2026, with global food volumes rising 3% and beverage volumes increasing 2%, marking its strongest first-half volume growth since 2022.

The company is investing in affordability initiatives and expanding its portfolio, particularly in permissible and portion-controlled products, to support U.S. volume growth.

International Segment Performance To Persist

Management expects strong international performance to continue through the second half of 2026, with momentum carrying into the summer season.

For the third quarter, management expects continued strength in international operations, gradual improvement in North America, and an approximately one percentage point boost to EPS from tariff refund claims. These refunds are expected to help mitigate commodity inflation while allowing PepsiCo to continue investing in growth initiatives.

The company also anticipates a higher year-over-year tax rate in the third quarter, with certain investments and operating expenses weighted more toward the quarter compared with the fourth quarter. Ongoing productivity initiatives are expected to continue through the third and fourth quarters to support future growth investments.

The company also anticipates improved growth across its U.S. Foods and U.S. Beverages businesses during the second half. PepsiCo continues to project organic sales growth at the lower end of its long-term target range of 4% to 6% for the period.

Higher Inflationary Pressure

PepsiCo expects higher commodity inflation in the second half, partially offset by tariff refund claims that are projected to add about one percentage point to full-year EPS growth.

Despite inflationary pressures, including higher fuel costs, PepsiCo expects its international business to remain strong. It continues to target the lower end of its long-term organic sales growth range for the second half.

PepsiCo Full Year Outlook

PepsiCo reaffirmed its fiscal 2026 guidance, projecting organic revenue growth of 2% to 4% and core constant currency EPS growth of 4% to 6%.

The company also maintained adjusted EPS guidance of $8.55 to $8.71, compared to the $8.64 estimate, and sales guidance of $97.68 billion to $99.56 billion, versus the $98.88 billion estimate.

Moreover, management reaffirmed its full-year guidance, supported by continued strength in international markets and gradual improvement in North America, though at a slower pace than previously expected after a softer second quarter.

The company expects its international business to surpass $40 billion in annual revenue this year and now accounts for roughly two-thirds of beverage volumes and more than half of food volumes.

PEP Price Action: PepsiCo shares were down 0.29% at $137.46 during premarket trading on Friday, according to Benzinga Pro data.