PepsiCo reported third-quarter net revenue of $25.27 billion on Thursday, up 5.6% from a year earlier, while cutting its full-year core earnings forecast as its North American business continues to underperform.
The company now expects core earnings per share to grow 2.5% to 3.5% for fiscal 2026, down from its prior guidance of growth at the low end of a range of 5% to 7%. It lifted its net revenue outlook to approximately 6% growth, toward the high end of its prior range of 4% to 6%, the company said.
Third-quarter adjusted EPS came in at $2.34, up 2% from a year earlier. Analysts polled by LSEG had expected adjusted earnings of $2.29 per share and revenue of $24.96 billion, according to CNBC.
International operations drove the quarter’s results. Organic revenue grew in each international segment, with Asia Pacific Foods posting 9% organic revenue growth and Europe, Middle East and Africa posting 7%, the company said. PepsiCo’s international business has accounted for 41% of net revenue so far this year, according to CNBC.
North America remained the weak spot. The North American beverages unit posted volume that shrank 2% in the quarter, while the North American convenient foods division reported flat volume. “Our business in North America performed below our expectations and represents a meaningful opportunity for improvement,” Chairman and CEO Ramon Laguarta said in a statement.
CFO Steve Schmitt said the domestic turnaround is moving more slowly than expected, according to CNBC. The company’s strategy has centered on innovation, advertising and marketing, with its snacks leaning into simpler ingredients and functional benefits, and its drinks focused on functional hydration and zero-sugar options. Laguarta said PepsiCo is pursuing structural cost reductions as a way to finance growth-oriented investments while contending with rising input cost pressures, according to CNBC.
PepsiCo’s North American struggles have been building throughout the year. The company had announced plans to raise prices on chips and sodas by the end of 2026 or early 2027, months after cutting prices on brands such as Lay’s and Doritos by as much as 15% in February to win back consumers. The planned increases, expected to be in the low-to-mid single digits, came as higher commodity costs pressured margins in the second half of the year.
PepsiCo stock fell less than 1% in premarket trading Thursday.
Source: finance.yahoo.com
