PepsiCo to cut costs as weak N.America business hurts annual core profit forecast

PepsiCo announced plans to implement further cost cuts on Thursday, following a reduction of its annual core profit forecast. The company cited sluggish demand for its snacks and beverages in North America and escalating input costs as the primary reasons for the forecast adjustment.

The consumer goods sector, which includes companies like PepsiCo, General Mills, McCormick, and Conagra Brands, is grappling with a challenging environment. Rising input costs are putting pressure on profit margins, while cautious consumer spending due to increasing gas prices is dampening demand.

PepsiCo's CEO, Ramon Laguarta, stated that additional structural cost reduction measures are being identified and will be put into action in the coming months. These efforts aim to fund investments that will boost organic revenue growth and alleviate the effects of rising input costs.

The company forecasts its fiscal 2026 core earnings per share, adjusted for currency fluctuations, to increase by 1 to 2 percent, as opposed to the earlier forecast of a 4 to 6 percent rise. PepsiCo also expects annual organic revenue to grow by approximately 3 percent, compared to the previous forecast of a 2 to 4 percent increase.