PepsiCo cuts forecast and deepens cost cuts as North America recovery drags
PEP•PepsiCo lowered its fiscal 2026 core earnings-per-share growth forecast to 1% to 2%, from the low end of 4% to 6%, and said North American recovery is taking longer than planned. Third-quarter revenue exceeded market expectations, while the company’s core operating margin fell 35 basis points year over year.
1. Forecast and margin pressure
PepsiCo said growth and margin recovery in North America were taking longer than planned and pledged additional cost cuts. It adjusted its 2026 organic revenue forecast to about 3%, from a prior range of 2% to 4%, and reduced its forecast for currency-adjusted core earnings-per-share growth to 1% to 2%, versus its previous expectation for the low end of 4% to 6%.
2. North America challenges
The company’s core operating margin fell 35 basis points in the third quarter from a year earlier and was down 25 basis points year to date, to 16.5% of revenue. Third-quarter food volumes in North America were flat and beverage volumes fell 2%. CFO Steve Schmitt said the region’s core operating margin would remain under pressure in the fourth quarter.
3. Cost cuts and leadership pressure
CEO Ramon Laguarta said additional cost cuts would be implemented in the coming months to accelerate organic revenue growth and offset rising input costs. PepsiCo is expanding its high-protein product range and executives expect consumers in North America to remain under pressure over the next 12 to 18 months. An investor said pressure on Laguarta was high and rising.
