PepsiCo cut its 2026 profit outlook on Oct. 8, in the same release that reported $25.27 billion in quarterly revenue for the 12 weeks ended Sept. 5. Sales were up 5.6% from a year earlier, and core earnings per share of $2.34 came in 2% higher. Even so, the company now expects full-year core EPS to grow 2.5% to 3.5%, below the low end of the 5% to 7% range it had given before.
The figures come from PepsiCo’s earnings exhibit filed with the SEC. Chairman and Chief Executive Ramon Laguarta said in it that the company is “acting with urgency to sustainably improve our performance in North America,” and that “additional structural cost reduction actions are being identified and will be implemented in the coming months.”
Behind the headline is a split between a business that is growing and one that is not. Revenue beat what analysts expected, but North America, the largest region in the release by revenue, is where the results were weakest. Anyone holding PepsiCo shares, or a fund that does, needs to know where the shortfall sits before judging whether the lower forecast is a one-quarter problem.
PepsiCo says its next round of structural cost cuts will be identified and carried out in the coming months, which is the next piece of news to expect.
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A beat on sales and earnings per share
Wall Street had been looking for roughly $25 billion in revenue and $2.29 a share in core earnings, according to Yahoo Finance’s market blog for Oct. 8. PepsiCo’s $25,274 million and $2.34 cleared both. Organic revenue, which strips out currency and acquisitions, rose 3.1%, so more than two points of the 5.6% headline growth came from acquisitions, currency and other items.
On a reported basis, which includes one-time items, the quarter looks stronger still. Reported EPS was $2.23, up 17%, and reported operating profit was $4,260 million, up 19%. Core operating profit, the measure that excludes those items, was $4,277 million, up 3%.
North America: flat foods, smaller drink volumes
PepsiCo Foods North America reported revenue of $6,504 million, essentially flat on the year. Its core operating profit fell 12% on a constant-currency basis, the weakest result in the release. It is part of the North American performance Laguarta’s urgency comment refers to.
PepsiCo Beverages North America did better on the top line, with revenue of $7,706 million, up 5%, mainly because of acquisitions completed in 2025. Volume fell 2%, though, and core operating profit rose 4% in constant currency. Between them the two North American units account for $14.2 billion of the quarter’s $25.27 billion in revenue, more than half, and the foods side showed no growth while the beverage gain came mainly from acquisitions.
International: where the growth came from
The faster growth was overseas. EMEA, PepsiCo’s Europe, Middle East and Africa segment, had revenue of $5,413 million, up 8%, with organic growth of 9%. Latin America Foods reached $3,021 million, up 14% reported and 6% organic. Asia Pacific Foods posted $1,229 million, up 10% with organic growth of 9%, and the International Beverages Franchise recorded $1,401 million, up 8% and 7% organic.
Those regions carried much of the company’s organic growth. They did not keep the full-year profit forecast from being lowered.
The tariff refund that lifted core profit
One line in the release explains part of why the quarter looked better than the underlying trend. Tariff refunds had a 4-percentage-point favorable impact on core operating profit. The release gives no dollar amount for it. Core operating profit rose 3% in total, so by simple subtraction the business excluding the refund would have shown a small decline.
PepsiCo is one of several companies that cited refunds of tariffs the Supreme Court struck down in October filings. An SEC full-text search of Form 8-Ks from Oct. 1 to Oct. 9 returned seven that mention the phrase, including PepsiCo’s, which is dated Oct. 8. A refund of past duties is a one-time gain, not a sign that the underlying business improved, and it does not repeat in future quarters unless more money arrives.
The guidance, line by line
The release shows the forecast changes in a before-and-after table. Core EPS growth moved to +2.5% to +3.5% from the low end of +5% to +7%. Core constant currency EPS growth moved to +1% to +2% from the low end of +4% to +6%. Both are cuts.
Some lines improved. Organic revenue growth is now about 3% against 2% to 4%, and net revenue growth is about 6% against 4% to 6%. Foreign exchange is expected to add about 1.5% to revenue, up from about 1%, and acquisitions net of divestitures about 1.5%, up from about 1%. The core effective tax rate is about 21%, down from about 22%.
The release does not give a specific reason for the earnings cut. Its list of risks includes tariffs, input cost inflation and consumer and economic conditions, and Laguarta’s own comments point to North America and to “rising input cost inflation.”
Reading PepsiCo’s next report against this one
The earnings exhibit linked above is free to read in full on the SEC’s website, and PepsiCo’s later filings will appear in the same place. The comparison that matters is between the segment lines in this release and the next one: Foods North America core operating profit, Beverages North America volume, and whether tariff refunds are quoted again in points or in dollars.
A second thing to watch is the cost program. Laguarta said the actions will be identified and put in place “in the coming months,” which means a number could come with the fourth-quarter results. A dollar target would give investors a way to judge whether the 2.5% to 3.5% range is conservative or already stretched.
The release’s own table sets the baseline: core EPS growth of 2.5% to 3.5% for 2026, down from the low end of 5% to 7%, on third-quarter revenue of $25,274 million.
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This article was produced with AI assistance and reviewed by The Financial Wire’s editorial team.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
