PepsiCo Cuts Profit Forecast, Deepens Cost-Cutting Plan

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: October 8, 2026

Key Moments

PepsiCo reduced its fiscal 2026 core earnings per share outlook to a 1% to 2% increase after currency adjustment, from a prior view of a low-end 4% to 6% rise.
North America performance remained soft, with third-quarter foods volumes flat and beverage volumes down 2% from a year earlier.
Despite guidance cuts, quarterly revenue rose 5.6% to $25.27 billion and core EPS reached $2.34, both topping analyst estimates.

PepsiCo Cuts Core Profit Guidance and Targets New Savings

Oct 8 (Reuters) – PepsiCo lowered its annual core profit outlook and announced plans for further cost reductions, citing slower-than-anticipated progress in restoring growth and profitability in its key North American operations.

Management indicated that the efforts to revive performance in the region are taking longer than initially expected, prompting a renewed focus on structural efficiencies to support future investments.

Cost Pressures and Industry-Wide Demand Challenges

The company’s comments underscored persistent challenges across the packaged food sector, where peers including General Mills, McCormick and Conagra Brands are increasing spending on promotions and affordability programs to stimulate demand while facing elevated input costs.

“Additional structural cost reduction actions are being identified and will be implemented in the coming months to help fund investments that aim to accelerate organic revenue growth and mitigate the impacts of rising input cost inflation,” PepsiCo CEO Ramon Laguarta said in a statement.

North America Remains a Weak Spot

PepsiCo has been contending with softness in its North America business. In the third quarter ended September 5, volumes in the foods segment were flat, while beverage volumes declined 2% year over year.

The region has remained a drag despite earlier pricing actions. In February, the company reduced prices by up to 15% on certain products, including Lay’s and Doritos, in an attempt to bolster demand.

More recently, PepsiCo moved in the opposite direction on some items. Last month, the company said it would implement price increases on select U.S. products to counter higher costs and support profitability in North America, where margins have been pressured by affordability initiatives, increased marketing expenses and subdued demand.

Activist Pressure and Strategic Review

PepsiCo has been facing calls to reinvigorate its soda portfolio, enhance its share performance and consider divesting non-core food assets following the disclosure last year that activist investor Elliott Investment Management had taken an approximately $4 billion stake.

Following talks with Elliott, PepsiCo announced in December that it would conduct a review of its North American supply chain and pursue aggressive cost-cutting actions.

“In North America, we remain committed to improving growth and core operating margin. However, it is taking more time than we planned,” said PepsiCo CFO Steve Schmitt in prepared remarks.

Market Reaction and Updated Outlook

Shares of PepsiCo were up about 1% in premarket trading.

The company now expects fiscal 2026 core earnings per share, after adjusting for currency fluctuations, to increase by 1% to 2%, compared with its previous forecast for growth at the low end of a 4% to 6% range.

PepsiCo still anticipates annual organic revenue growth of about 3%, versus its prior expectation for an increase between 2% and 4%.