PepsiCo has indicated it will cut costs after lowering its earnings outlook for 2026 on the back of margin pressures in its North America business.
Reporting its third-quarter financial results today (8 October), the Mountain Dew brand owner said it now expected to achieve a 1-2% rise in core earnings per share this year.
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PepsiCo had previously forecast core EPS to sit in the “low end” of the 4 to 6% range.
CEO Ramon Laguarta said the company is “committed to improving growth and core operating margin” but stressed “it is taking more time than we planned”.
“Therefore, we expect North America’s core operating margin performance to remain under pressure in the fourth quarter,” he said. “We aim to partially mitigate this pressure through productivity savings, operational excellence and tightly managing costs.”
Laguarta said the business was identifying “structural cost reduction actions that reduce redundancies and curtail discretionary expenditures”.
He said those could include “reductions in corporate costs and other initiatives not directly tied to growth”.
Laguarta said the cost savings “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.”
During the quarter, PepsiCo’s net revenue grew 5.6%, while organic revenue was up 3.1%, at $25.7bn.
Group operating profit jumped 19% to $4.3bn while “core” operating profit rose 3% to a similar figure.
In his statement alongside the results, Laguarta said PepsiCo was “acting with urgency to sustainably improve our performance in North America through more investments in innovation, effective brand building, and sharper marketplace execution by channel”.
The group’s food business in North America remained a sore point for the Poppi soda and Lay’s crisps maker in the third quarter, while its international business continued to thrive.
PepsiCo said “trends” for organic revenue and volume in the PepsiCo Foods North America division “improved sequentially”, though organic revenue for the business in the quarter itself “declined slightly”.
The company also noted net revenue for convenient foods “improved sequentially”, showing an improvement in volume market share and volume growth for savoury snacks, which was offset by “lower effective net pricing”.
Laguarta said the core operating margin for the unit dipped by 280 basis points, “reflecting the impact of affordability investments, the lap of an asset sale gain in the prior year quarter” as well as greater spend on advertising and marketing.
PepsiCo’s beverages business in North America also saw its core operating margin dip 15 basis points, Laguarta said. This was as a result of pressures on “volume and channel mix”, and again, larger investments in advertising and marketing.
The group’s Beverages North America unit saw net revenue rise 5% in the quarter, attributed mainly to acquisitions made last year.
Organic revenue for the division was down “slightly” in the period while “organic volume trends” also saw sequential improvement, attributed to “functional hydration” and flavoured fizzy soft drinks.
PepsiCo’s international business saw organic revenue rise 8% in the period, which is the highest growth rate the business has seen since the first quarter of 2024, according to Laguarta.
The Cheetos snacks owner’s North America business was the focus of criticism it received in September 2025 from activist investor Elliott Investment Management.
Eliott manages funds with a $4bn stake in PepsiCo and has pushed for PepsiCo to become “a more focused, streamlined” business.
As part of its recommendations last year, the activist investor called on the group to consider a potential refranchising of its drinks bottling network in North America.
It also suggested it review its drinks portfolio in the region to make that side of the business less complex.
