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

PepsiCo announced on Thursday plans to implement further cost reductions after reducing its annual core profit forecast. The decline in forecasts stems from low demand for snacks and beverages in North America and increasing expenses for inputs. Major consumer packaged goods companies, including PepsiCo, General Mills, McCormick, and Conagra Brands, are facing challenges with rising input costs straining profit margins, while cautious expenditures due to high gas prices are reducing demand.

PepsiCo's CEO, Ramon Laguarta, disclosed that the company will identify and implement additional structural cost reduction measures in the coming months. These actions aim to support investments targeting accelerated organic revenue growth and offsetting the effects of rising input cost inflation. The CEO made this announcement in a statement. The company's shares surged by approximately 1 percent in premarket trading.

PepsiCo projects a 1 to 2 percent increase in its fiscal 2026 core earnings per share after adjusting for currency fluctuations. This is in contrast to its previous forecast of a low-end rise of 4 to 6 percent. Furthermore, the company anticipates an annual growth of about 3 percent in organic revenue, compared to its earlier forecast of a range between 2 to 4 percent.