PepsiCo has lowered its profit forecast for the current fiscal year, attributing the revision to sluggish soft drink sales and ongoing challenges in its turnaround efforts in North America. The company announced plans to cut costs across various parts of its business, including at the corporate level, in order to reinvest in its US beverage and snack operations.

Steve Schmitt, PepsiCo’s chief financial officer, expressed concern over the company’s beverage segment, stating that while the firm is performing well in hydration and energy drinks, it is struggling to compete effectively in the soft drinks market. He emphasized that the company is focusing urgent efforts on improving performance in this category.

The company now projects core constant currency earnings per share to grow between 1 percent and 2 percent this fiscal year, a notable downgrade from an earlier forecast of 4 to 6 percent growth at the low end. PepsiCo faces persistent cost pressures, especially in North America, which are squeezing profit margins. Additional headwinds include cautious consumer spending amid inflationary pressures and the expanding use of GLP-1 weight-loss drugs, which reduce appetite and negatively impact snack consumption.

Despite these challenges, PepsiCo’s overall third-quarter revenue increased by 5.6 percent year-over-year to $25.3 billion, while net income rose 17 percent to $3.1 billion. Earlier in the year, the company implemented price cuts of up to 15 percent on products such as Lay’s chips and Doritos, aiming to stimulate demand. However, it signaled last month that some prices would rise to counteract inflation-driven input cost increases. Other packaged food companies, including General Mills, McCormick, and Conagra Brands, have also been navigating similar pressures, intensifying promotional efforts and affordability initiatives to restore consumer interest.

In response to the current market environment, PepsiCo has delivered record productivity savings and intends to pursue further structural cost reductions in the coming months. Chief Executive Ramon Laguarta noted that these measures are designed to fund investments aimed at driving organic revenue growth and offsetting rising input costs.

Nonetheless, investor sentiment appeared positive following the announcement, with PepsiCo shares closing up 3.7 percent at $128.34 in New York trading.