Pepsi Bottling's Net Income Falls 11%

Pepsi Bottling Group Inc.'s fiscal third-quarter net income fell 11% amid slumping case volume it blamed on the weakening global economy and a year-earlier gain.

The world's largest bottler for PepsiCo Inc., based in Somers, N.Y., reported net income for the quarter ended Sept. 6 of $231 million, or $1.09 a share, down from $260 million, or $1.16 a share, a year earlier. Year-earlier results included a net 14-cent tax benefit.

Revenue rose 2.3% to $3.81 billion. Earlier this month, the company said it expected earnings of $1.02 to $1.06 a share, with revenue up 3%.

Gross margin fell to 45.6% from 46.3%.

Bottling companies have been hurt recently by soaring prices for sweeteners, fuel and packaging. Pepsi Bottling saw world-wide physical case volume decline 6% in the quarter. But revenue per case jumped 9% despite 5% growth in North America.

Looking ahead, Pepsi Bottling raised the low end of its fiscal-year earnings view by two cents and now sees profits of $2.32 to $2.38 a share. The company still sees revenue growth in the mid-single digits on a percentage basis.

Last week, Pepsi Bottling said it would acquire Lane Affiliated Companies Inc. -- the eighth largest Pepsi bottler in the U.S. with operations in Colorado, Arizona and New Mexico. Financial terms of the deal -- which is expected to close during the fourth quarter -- weren't disclosed. The deal is the company's largest acquisition of a U.S. bottler since Pepsi Bottling went public in 1999.

Source: Online.wsj.com