PepsiCo has reported better-than-expected third-quarter earnings and revenue, helped by international growth, but cut its full-year earnings forecast as weakness in its North American business continued to weigh on performance.
The drinks and snacks group now expects core earnings per share to rise by between 2.5% and 3.5% in 2026. That is down from its previous forecast of growth at the lower end of a 5% to 7% range.
PepsiCo raised its expectation for full-year net revenue growth to about 6%, at the top of its earlier guidance of between 4% and 6%.
Shares rose by about 2% in pre-market trading. Adjusted earnings per share came in at 2.34 US dollars, compared with the 2.29 dollars expected by analysts, while revenue reached 25.27 billion dollars against expectations of 24.96 billion dollars.
Net income attributable to PepsiCo increased to 3.05 billion dollars, or 2.23 dollars per share, in the three months to the end of the quarter. That compares with 2.6 billion dollars, or 1.90 dollars per share, a year earlier.
Net sales rose by 5.6%, while organic revenue, which excludes acquisitions, disposals and currency movements, increased by 3.1%. Beverage volumes grew by 3% and food volumes by 1%.
North American business remains a challenge
International markets remained the strongest part of the business and accounted for 41% of PepsiCo’s net revenue so far this year, chief executive Ramon Laguarta said in prepared remarks.
Volumes increased in all but one of the company’s international business units. Convenient foods in Europe, the Middle East and Africa was the exception, with volumes falling by 1%.
In North America, beverage volumes declined by 2%, while food volumes were flat. “Our business in North America performed below our expectations and represents a meaningful opportunity for improvement,” Mr Laguarta said.
Chief financial officer Steve Schmitt said the turnaround of the domestic divisions was progressing more slowly than expected. PepsiCo has focused on product innovation, advertising and marketing as it seeks to revive the businesses.
The company is promoting simpler ingredients, alternative oils and benefits such as protein and fibre in its snacks. Its drinks strategy is centred on functional hydration, flavoured soft drinks, energy drinks and zero-sugar products.
Mr Laguarta said there had been some improvement, with the North American convenient foods division, which includes Doritos and Quaker Oats, recording better organic revenue than in the previous quarter.
Organic volume trends also improved in North American beverages, helped by functional hydration and zero-sugar drinks. However, PepsiCo’s carbonated soft drinks continued to lag behind the wider category, including rival Coca-Cola.
The company plans to reduce costs by cutting redundancies and discretionary spending, with the savings intended to fund further investment in innovation and marketing.
