Pepsi Bottling's Profit Rises 4.4%, Raises Earnings Outlook

Pepsi Bottling Group Inc. (PBG), the largest bottler of PepsiCo Inc. (PEP) beverages, Tuesday said its profit for the latest quarter rose 4.4 percent as volume improved.

The company also gave a slightly more optimistic outlook for full-year earnings.

For the company's fiscal third quarter ended Sept. 4, Pepsi Bottling reported net income of $191 million, or 73 cents a share, compared with earnings of $183 million, or 67 cents a share, a year earlier.

However, the results for the latest quarter included a gain of 2 cents a share from the settlement of certain international tax audits.

Without the gain, Pepsi Bottling said it would have earned 71 cents a share. Analysts surveyed by Thomson First Call had been looking for third-quarter earnings, excluding items, of 70 cents a share.

Net revenue rose 4.4 percent to $2.93 billion from $2.81 billion in last year's third quarter.

Citing three quarters of strong earnings, Pepsi Bottling adjusted its estimate for full-year earnings to a range of $1.71 to $1.74 a share, excluding the tax gain. The company's previous estimate was for earnings of $1.68 to $1.74 a share.

Worldwide case volume, a key measure of performance in the soft-drink industry, rose 2 percent on a constant-territory basis. Constant-territory calculations assume acquisitions made in 2003 were made at the beginning of 2003 and exclude acquisitions made in 2004.

Volume rose 1 percent in the United States, 5 percent in Europe, and 3 percent in Mexico, where the company believes it is on the right track to "sustained improvement."

The Mountain Dew line of beverages had a strong quarter, benefiting from the introduction of Mountain Dew Pitch Black (search), a drink that adds black grape flavor to traditional Mountain Dew. Tropicana juice drinks also performed well, the company said.

On the down side, worldwide operating income was flat, dampened by rising costs of raw materials and higher benefit and compensation expenses.