PepsiCo lowers profit-growth forecast as North American recovery lags

PepsiCo lowered its 2026 profit-growth forecast on October 8 as recovery in its North American business took longer than expected, and announced plans for further cost reductions. The change means the snacks and drinks maker expects slower earnings growth despite rising quarterly revenue, with pressure on North American profitability set to persist into the fourth quarter.

The company now forecasts growth of 1–2% in core earnings per share at constant currencies, down from the low end of its previous 4–6% range. That remains a forecast for higher earnings, although at a slower pace than PepsiCo had previously expected.

PepsiCo revenue rises as earnings outlook weakens

In its third-quarter earnings release, PepsiCo reported net revenue of $25.274 billion, up 5.6% from a year earlier. Organic revenue increased 3.1%. Reported quarterly earnings per share rose 17% to $2.23, while core earnings per share increased 2% to $2.34.

PepsiCo now expects approximately 3% organic revenue growth for the full year, within its previous 2–4% range. Its net revenue growth forecast is approximately 6%, compared with the previous 4–6% range. The weaker earnings outlook therefore accompanies revenue expectations that remain within, or at the upper end of, the earlier ranges.

North American volumes and margins remain under pressure

North American food volumes were flat in the third quarter, while beverage volumes fell 2% from a year earlier, Reuters reported. Across PepsiCo as a whole, core operating margin fell 35 basis points year on year in the quarter. Its year-to-date margin was down 25 basis points at 16.5% of revenue.

Chief financial officer Steve Schmitt said improving North American growth and core operating margin was taking longer than planned. “However, it is taking more time than we planned,” he said in prepared remarks quoted by Reuters. He said the region’s core operating margin would remain under pressure in the fourth quarter.

The pricing backdrop has also shifted during the year. Reuters reported that PepsiCo cut prices by up to 15% on products including Lay’s and Doritos in February, but said in September that it would raise some chip prices to reflect input-cost inflation.

Other packaged-food companies face similar pressures. Reuters reported that General Mills, McCormick and Conagra Brands were spending more on promotions and affordability initiatives to revive demand while also contending with higher input costs.

Further cost reductions planned for coming months

Chief executive Ramon Laguarta said additional structural cost reductions were being identified and would be implemented in the coming months. The intended savings would help finance investments aimed at accelerating organic revenue growth and offsetting rising input-cost inflation, according to his statement quoted by Reuters.

The announcement sets out planned actions, rather than completed savings. The reported plans do not specify the amount of additional savings, identify affected jobs or facilities, or provide precise implementation dates. The benefits of those measures therefore remain prospective.

The turnaround follows activist investor Elliott Investment Management taking a roughly $4 billion stake about a year earlier, Reuters reported. In December 2025, after discussions with Elliott, PepsiCo targeted a 100-basis-point margin improvement over three years.

Analysts and investors press for North American improvement

RBC Capital Markets analyst Nik Modi told Reuters that the beverage business continued to disappoint. He predicted further market-share losses to Coca-Cola and Keurig Dr Pepper and argued that PepsiCo should fully refranchise its beverage business. That was his recommendation; the report did not describe it as an announced PepsiCo decision.

David Wagner, head of equity and portfolio manager at PepsiCo shareholder Aptus Capital Advisors, told Reuters that international results had earned Laguarta some goodwill, but pressure on him was rising. Wagner said the next couple of quarters needed to show a meaningful North American improvement and described board and activist patience as finite. His comments were an investor assessment of the turnaround.

Despite the lower earnings-growth forecast, PepsiCo maintained its planned $8.9 billion in shareholder cash returns for 2026. That comprises $7.9 billion in dividends and $1 billion in share repurchases, according to the earnings release.