PepsiCo has lowered its full-year profit forecast, due to rising costs and weaker demand for its snacks and drinks.

It now expects core earnings per share, excluding currency movements, to grow between one per cent and two per cent in 2026, down from its previous forecast of growth at the lower end of a four per cent to six per cent range.

The downgrade comes despite PepsiCo reporting a 5.6 per cent rise in third-quarter revenue to $25.27bn, ahead of analysts’ expectations.

The Doritos and Pepsi maker said its recovery in North America was taking longer than anticipated, with beverage volumes falling two per cent during the quarter while food volumes remained flat.

Higher costs for commodities, fuel and packaging have weighed on profitability, while shoppers continue to rein in spending amid wider economic pressures.

PepsiCo chief financial officer Steve Schmitt warned: “We expect North America’s core operating margin performance to remain under pressure in the fourth quarter.”

The company’s core operating margin fell 35 basis points year on year during the third quarter and was down 25 basis points for the year to date, at 16.5 per cent.

PepsiCo said it would introduce further cost-cutting measures in the coming months to improve profitability and support investment in its brands.

The business has been working to revive demand in North America, including reducing prices by as much as 15 per cent on some Lay’s and Doritos products earlier this year.

However, it is now planning price increases on selected snacks and drinks to offset rising production costs.

PepsiCo’s international operations performed more strongly, helping to offset weaker trading in its home market.

The group now expects organic revenue to grow by around three per cent for the full year, compared with its previous forecast of between two per cent and four per cent.

Chief executive Ramon Laguarta said the company’s third-quarter performance reflected the strength of its international business and changes to its global product portfolio.

PepsiCo is also expanding its high-protein offering and healthier snack and beverage ranges as consumer preferences change, including growing demand for products suited to people taking weight-loss drugs.

The company has faced pressure to improve performance since activist investor Elliott Investment Management took a stake worth around $4bn last year.

The investor has pushed for changes to PepsiCo’s operations, with the company targeting improvements in margins and stronger sales growth as part of its turnaround plans.

Sign up here to get the latest grocery and food news each morning