* Q2 EPS 78 cents ex-items vs Street estimate 73 cents
* Revenue, volume lighter than Street expected
* Sees 2009 profit at high end of prior forecast
* Gives no update on bid from PepsiCo
* Shares down less than 1 percent
(Adds comments from company, analyst; updates stock activity)
By Jessica Wohl
CHICAGO, July 8 Pepsi Bottling Group Inc
PBG.N reported a higher-than-expected quarterly profit as
price increases and stronger U.S. sales of carbonated soft
drinks helped offset declining demand for pricier beverages.
Falling prices for aluminum also helped boost earnings, and
the largest bottler of PepsiCo Inc (PEP.N) beverages said
full-year profit would probably come in at the high end of its
forecast even though results in the current quarter might miss
Shares of Pepsi Bottling, which remained quiet on the bid
it received from PepsiCo in April, fell 0.6 percent.
While soft drinks are selling well as consumers look for
less-expensive treats, Pepsi Bottling said sales volume had
fallen 1 percent in the United States and Canada and 4 percent
overall as shoppers cut back on other beverages, such as
That trend could also help Pepsi's rivals, especially Dr
Pepper Snapple (DPS.N), as consumers switch to sodas. Dr Pepper
has a higher exposure to carbonated soft drinks than Pepsi,
Coca-Cola Co (KO.N) and their bottlers, which sell a wider
variety of beverages.
Dr Pepper has beaten Wall Street's expectations for two
quarters in a row as consumers looking to curb spending choose
its lower-priced soft drinks such as A&W and 7UP. This was also
the second consecutive quarter that Pepsi Bottling beat views.
Pepsi Bottling said selling drinks at restaurants and other
venues remained challenging as consumers cut back on
The company has seen some success in testing new sizes of
beverages sold in stores. It plans to expand distribution of a
16-ounce soda can priced at 99 cents in the current quarter.
Pepsi Bottling, which has a "positive" outlook for the
remainder of 2009 and beyond, said it expected full-year
earnings toward the high end of its prior forecast of $2.30 to
$2.40 per share.
It also plans to raise prices after the U.S. Labor Day
holiday in September, as it typically does.
Argus Research analyst Erin Ashley Smith said this was the
second time she had heard a food and beverage company sound a
little more optimistic about U.S. trends for the second half of
the year, following comments from General Mills (GIS.N) last
PEPSICO STILL TRYING FOR DEAL
PepsiCo, the world's No. 2 soft drink maker behind Coke,
has offered $6 billion to buy the remaining stakes in its two
largest bottlers, Pepsi Bottling and PepsiAmericas Inc PAS.N.
The bottlers have rejected Pepsi's offer as too low.
Pepsi Bottling did not give any update on PepsiCo's bid.
Earlier on Wednesday, PepsiCo Chief Executive Indra Nooyi said
the offer was "still out" to the bottlers. [ID:nL8662160]
The bid of $29.50 per share is below Pepsi Bottling's
trading price of $33.45 on Wednesday afternoon.
"We absolutely think they have more firepower as they
negotiate with PepsiCo to raise their estimates again if they
have to," said Bill Pecoriello, CEO of ConsumerEdge Research.
He expects the two sides to announce a deal over the next
couple of weeks, with Pepsi raising its bid for Pepsi Bottling
to the upper $30s. Pepsi Bottling could increase its full-year
earnings outlook by another 10 cents per share, he said.
Pepsi Bottling's net income rose to $211 million, or 96
cents a share, in the second quarter ended June 13 from $174
million, or 78 cents a share, a year earlier.
Excluding items, Pepsi Bottling earned 78 cents a share.
topping the analysts' average forecast of 73 cents, according
to Reuters Estimates.
Net revenue fell 7 percent to $3.27 billion, lighter than
the analysts' average estimate of $3.44 billion.
Selling, delivery and administrative expenses declined 10
percent. The company now expects to save about $265 million
overall this year, up $15 million from an earlier view.
Pepsi Bottling expects sales to rise at a low single-digit
percentage rate this year, excluding the impact of currency
fluctuations. It forecast third-quarter earnings of $1.03 to
$1.08 per share, below Wall Street's average view of $1.10.
(Reporting by Jessica Wohl in Chicago and Dhanya Skariachan in
Bangalore; Editing by Lisa Von Ahn and Gerald E. McCormick)