Updated version 2 - PepsiCo to cut costs as weak North American business drags down core profit outlook
路透社2026/10/08 11:06Reuters, October 8 – PepsiCo (PEP.O) lowered its annual core profit forecast on Thursday and announced further cost-cutting initiatives, warning that efforts to restore growth and profitability in its key North American business are taking longer than expected. This highlights broader challenges in the packaged food industry, where companies like General Mills (GIS.N), McCormick (MKC.N), and Conagra Brands (CAG.N) are increasing promotions and pricing initiatives to stimulate demand while managing rising input costs. PepsiCo CEO Ramon Laguarta stated, "We are developing additional structural cost reduction measures that will be implemented in the coming months to fund investments aimed at accelerating organic revenue growth and mitigating the impact of rising input cost inflation." PepsiCo has been struggling with sluggish performance in its North American business. In the third quarter ended September 5, snack volumes were flat, while beverage volumes declined by 2% compared to the previous year. Despite price reductions of up to 15% for products such as Lay's and Doritos in February, the segment remains a weak spot. Last month, PepsiCo announced it would raise prices for some U.S. products to offset rising costs and improve profitability in North America—a region where profit margins have been hit by affordability initiatives, increased marketing spending, and weak demand. Since Elliott Investment Management disclosed a stake worth about $4 billion in the company last year, PepsiCo has been under pressure to revitalize its carbonated beverage business, boost its stock price, and explore the sale of non-core food assets. Following consultations with Elliott, PepsiCo announced in December it would review its North American supply chain and implement aggressive cost-cutting measures. CFO Steve Schmitt said in prepared remarks, "In North America, we remain committed to improving growth and core operating margin, though it is taking longer than planned." PepsiCo shares rose about 1% in premarket trading. The company now expects core earnings per share growth of 1% to 2% on a currency-neutral basis for fiscal 2026, down from a previously forecast low end of 4% to 6%. Organic revenue is now expected to grow about 3%, compared to a prior forecast of 2% to 4%. According to data compiled by London Stock Exchange Group (LSEG), the company’s quarterly revenue rose 5.6% to $25.27 billion, above analysts’ expectations of $24.96 billion. Quarterly core earnings per share were $2.34, also exceeding the forecast of $2.29. (Reuters provides automated translations of its reports in several other languages for the convenience of non-English speakers. Automatic translations may contain inaccuracies or fail to convey required context. Reuters does not guarantee the accuracy of translations and provides them solely for readers’ convenience. Reuters takes no responsibility for any damages or losses resulting from use of its automated translation features.)
Supplemented with performance details and background information in paragraph 4
Reuters, Oct 8 - PepsiCo PEP.O on Thursday lowered its annual core profit outlook and announced it will implement further cost-cutting measures, while warning that efforts to restore growth and profitability in its key North American business are taking longer than expected.
This highlights broader challenges facing the packaged food industry. In this sector, companies such as General Mills GIS.N, McCormick MKC.N, and Conagra Brands CAG.N are ramping up promotions and value-based pricing measures to boost demand while grappling with rising input costs.
PepsiCo CEO Ramon Laguarta said in a statement: "We are developing further structural cost-saving measures and will implement them in the coming months to fund investments aimed at accelerating organic revenue growth and mitigating the impact of rising input cost inflation."
PepsiCo has been struggling with weakness in its North American business. In the third quarter ended September 5, food business volumes were flat, while beverage business volumes fell 2% year-on-year.
Despite the company cutting prices by as much as 15% this February for products such as Lay's and Doritos (link), the region remains a pain point for its business.
Last month, PepsiCo announced that it would (link) increase prices on some U.S. products to offset (link) continually rising costs and to enhance North American profitability—a region where margins have been hurt by value-based pricing, increased marketing spending, and sluggish demand.
Since activist investor Elliott Investment Management disclosed last year holding about $4 billion in shares (link), the company has faced pressure (link) to revitalize its carbonated beverage business, boost its stock price, and explore the sale of non-core food assets.
After discussions with Elliott, PepsiCo announced in December that it would review its North American supply chain and implement aggressive cost-cutting measures.
PepsiCo CFO Steve Schmitt said in prepared remarks: "In North America, we remain committed to improving growth and core operating margin. However, it is taking more time than we had planned."
The company's share price rose about 1% in pre-market trading.
The company expects fiscal 2026 core earnings per share, adjusted for currency fluctuations, to grow by 1% to 2%, whereas the prior forecast was at the low end of a 4% to 6% range.
Additionally, the company expects annual organic revenue to grow by about 3%, compared to its previous outlook of 2% to 4%.
However, according to data compiled by London Stock Exchange Group (LSEG), the company's quarterly revenue rose 5.6% to $25.27 billion, beating analyst estimates of $24.96 billion. Quarterly core earnings per share were $2.34, surpassing expectations of $2.29.
(To facilitate non-English speakers, Reuters has automated the translation of its reports into several other languages. As automated translation may contain errors or lack the necessary context, Reuters does not guarantee the accuracy of automated translation texts. They are provided for reader convenience only. Reuters accepts no liability for any harm or loss resulting from the use of automated translation functions.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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