US: Pepsi Americas driven by US non-carb growth
PepsiAmericas yesterday reported a small rise in first quarter net income and earnings per share to US$20.8m and US$0.15 respectively. The results compares to net income of US$20.5m US$0.14 for the first quarter of 2004.
However, there was a strong top line performance with worldwide sales revenue growth of 12.4% with average net selling prices up 5.1%. A 6.1% increase in worldwide volume contributed to the strong top line performance.
Worldwide operating income grew approximately 10% to US$55.1m driven by the strong domestic volume and worldwide pricing. The newly acquired CIC territories contributed 9% to the growth in worldwide operating income results in the quarter.
Net income for 2005 includes the operating results of the Central Investment Corporation (CIC) territories acquired on January 10, 2005. These results also include a special charge for Central European operations of US$2.5m, US$1.6m after tax, or US$0.01 per share.
"Our performance in the first quarter of 2005 continued the positive trends from last year and provide a solid base for us to achieve our plans for this year," said chairman and CEO Robert C. Pohlad. "The addition of the CIC territories was a positive addition to our results, but more importantly on a constant territory basis we continued to deliver solid top line results."
The US performance was the major driver to the overall strength of PepsiAmericas' first quarter operating results. Improvements in both the US and Caribbean volume combined with higher average net selling price across all geographies contributed to the strength on the top line, the company said.
US operating income improved 13.3% to US$67.1m versus US$59.2m in the first quarter of 2004.
The volume gains, combined with continued strength in average net selling price contributed to strong net sales growth of 11.9% to US$712.0m.
Non-carbonated beverage growth of 11.3% drove a one percent increase in US volume on a constant territory basis for the first quarter of 2005. Volume also benefited from the shift of the Easter holiday to the first quarter. The results for the quarter reflected the continued strength of Aquafina with volume growth over 25%.
However, the international operations reported a combined operating loss of US$12m, compared to the previous year's first quarter loss of US$9.1m. The international business was profitable in fiscal year 2004, and is expected to improve upon its profitability in 2005. In the first quarter, international sales increased 15.9% to $117.4m, the company said.
A statement said that the Central European business is continuing to rebound from the challenges it faced from EU entry in the second quarter of 2004. Reflecting the comparisons to the first quarter of 2004, volume was down 8.2% versus the prior year.
"The volume trends are improving and are anticipated to be positive on a full year basis," the statement said.
Average net selling prices helped to offset volume weakness, growing 18.9% in the quarter.
The Caribbean reported an operating loss in the first quarter of US$1.7m, compared to a loss of US$2.0m in the same period in 2004. Net sales improved 15.6% to US$47.3m driven by a 12.5% increase in volume and a 3.5% increase in average net selling price.
"We are off to a healthy start in 2005," said Pohlad. "Over the balance of the year, we anticipate that volume and pricing improvements will help to offset the continued cost pressures. Relying on this top line growth, we expect to achieve our full year 2005 outlook."
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