PepsiCo has reduced its full-year profit outlook as rising costs and weaker-than-expected performance in North America continue to weigh on the snacks and beverages business. The company now expects core earnings per share, excluding currency effects, to increase by 1% to 2% in fiscal 2026. That is below its earlier expectation of growth at the lower end of the 4% to 6% range.

The revision comes despite a stronger-than-expected third quarter for the overall company. PepsiCo reported revenue of about $25.27 billion for the quarter, up 5.6% from a year earlier and above market expectations. Adjusted earnings reached $2.34 per share, also ahead of analyst estimates, helped by continued strength in the company’s international operations.

North America remains the main concern for the company. Organic revenue in the region declined slightly for both food and beverages during the quarter, while food volumes remained broadly unchanged and beverage volumes fell 2%. Higher input expenses and cautious consumer spending have made it more difficult for PepsiCo to improve sales while protecting profit margins.

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PepsiCo had previously reduced prices on selected larger grocery-store bags of brands such as Lay’s and Doritos in an effort to encourage demand. However, the company has indicated that some prices will rise again in the coming months as it responds to higher costs. Chief Financial Officer Steve Schmitt said the earlier price reductions had also placed pressure on margins.

The company is now looking for additional savings to support its turnaround efforts. Chief Executive Officer Ramon Laguarta said PepsiCo plans to identify further structural cost reductions while continuing to invest in products and brands. The company is also focusing on products containing protein and fibre, simpler ingredients and changing consumer preferences, while seeking to improve its carbonated beverage business.

Despite the difficulties in North America, PepsiCo’s international operations continue to provide support for overall performance. The company expects organic revenue for the full year to rise by about 3%, compared with its previous forecast range of 2% to 4%. The contrasting performance between its domestic and international businesses leaves North America as the key area where PepsiCo must improve growth and margins.

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