Pepsi Bottling Group, the largest maker of Pepsi-Cola drinks, said on Tuesday its third-quarter profit rose, meeting expectations, as strong results in Russia helped offset lower-than-expected volume in the United States and Spain.
Pepsi Bottling said its profit rose to $178 million (€180m), in the quarter ended 7 September, from $150 million a year earlier.
Earnings were in line with analysts' forecasts that the company, which bottles drinks such as Pepsi sodas and Aquafina bottled water, would earn 60 cents to 63 cents per share for the quarter, with a mean target of 61 cents, according to Thomson First Call.
The Somers, New York, company said net revenue rose to $2.46 billion from $2.27 billion a year earlier.
Shares of Pepsi Bottling were up more than 6 per cent at $24.85 in morning trading on the New York Stock Exchange. Shares of other soft drink companies, such as PepsiCo, were showing more modest gains.
Pepsi Bottling said worldwide case volume grew 1 per cent in the quarter, assuming all significant acquisitions made in 2001 were made at the beginning of the 2001 fiscal year and excluding significant acquisitions made in 2002. Volume growth in the key US market was also up 1 per cent.
US volume was driven by cold drink sales at convenience stores, gas stations and large format stores, while fountain and vending volume at tourist locations remained soft.
Pepsi Bottling still expects volume to be up just 2 per cent in 2002, down from an earlier view of 3 per cent growth.
UBS Warburg analyst Caroline Levy said she was concerned about the volume growth outlook. She said the Pepsi system will find it challenging to grow volume, partly because of momentum in Coca-Cola's system right now.
"I think the Pepsi system is coming off a good innovation cycle and faces some challenges in 2003," said Levy.
Chief executive John Cahill said in a statement Pepsi Bottling is looking forward to completing its purchase of Pepsi-Gemex, the main bottler of Pepsi products in Mexico. During a conference call, Cahill said he expects to close the deal sometime in November. Pepsi Bottling already operates in Canada, Greece, Russia, Spain, Turkey and the United States.
Pepsi Bottling said it still expects earnings before interest, taxes, depreciation and amortization to increase 10 per cent to 12 per cent for the year, and said it expects operating free cash flow in 2002 of $375 million, up $80 million from 2001.