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

PepsiCo announced on Thursday that it would pursue further cost reductions due to sluggish demand for its snacks and beverages in North America. The company attributed this to higher input costs, inflation, and the emergence of GLP-1 weight-loss drugs. Despite exceeding market expectations for its third-quarter revenue, PepsiCo warned that growth and margin recovery in North America would be slower than anticipated, citing a 35 basis point drop in core operating margin for the third quarter.

CFO Steve Schmitt stated that while PepsiCo remains committed to improving growth and core operating margin in North America, progress has taken longer than planned. CEO Ramon Laguarta added that the company is implementing record productivity savings and more structural cost reduction actions to help fund investments aimed at accelerating organic revenue growth and offsetting rising input costs.

Analyst Nik Modi noted that PepsiCo's challenges are industry-wide, with packaged food makers also facing difficulties in maintaining shelf-space and competitiveness.