UPDATE:Pepsi Bottling 2Q Profit Up 21% On Tax Gain
09 July 2009 - 2:54AM
Dow Jones News
Pepsi Bottling Group Inc.'s (PBG) second-quarter profit rose 21%
on a tax benefit, but the bottler's revenue missed Wall Street's
estimates.
Analysts said the bottler's volumes were lower than they had
expected amid tepid sales of pricier noncarbonated soft drinks.
Sales of bottled water and more expensive offerings, like
ready-to-drink teas, have weakened during the recession, putting
pressure on the beverage companies and their bottlers. Pepsi
Bottling shares were recently down 14 cents, or 0.42%, to
33.51.
On a conference call, company executives said they are seeing an
improvement in sales of carbonated soft drinks in North America and
that their markets appear to be stabilizing. The company's
earnings, helped by the tax benefit, beat Wall Street's
forecast.
The company was the subject of an acquisition bid by PepsiCo
Inc. (PEP) in April, but the bottler has so far rejected PepsiCo's
$29.50 a share offer, calling it inadequate. The rejection was
widely seen as an effort to negotiate a higher price. PepsiCo,
which already holds a 33% stake in the bottler, has maintained that
its offer is fair. The bottler didn't offer further updates on the
deal in its conference call.
Pepsi Bottling reported a second-quarter profit of $211 million,
or 96 cents a share, up from $174 million, or 78 cents a share,
from a year earlier. Excluding the tax benefit and other one-time
charges, the company earned 78 cents in the recent quarter.
Revenue decreased 7% to $3.27 billion. Analysts polled by
Thomson Reuters most recently were looking for earnings of 73 cents
a share and revenue of $3.45 billion.
"Most of the volume weakness in North America came from bottled
water and teas," said John Faucher, a JPMorgan Chase & Co.
analyst.
Total case volume fell 4%. Pepsi Bottling expects to incur fees
of $40 million to $60 million for external advisers on the PepsiCo
bid.
The company said its 2009 earnings will be at the high end of
its previous guidance of $2.30 to $2.40 a share. Pepsi Bottling
plans to raise prices after Labor Day.
-By Anjali Cordeiro, Dow Jones Newswires; 212-416-2200;
anjali.cordeiro@dowjones.com
(Tess Stynes contributed to this article.)