US: Pepsi Bottling Group slashes jobs, cuts forecast

More than 3,000 jobs are set to be cut by Pepsi Bottling Group across the US, Europe and Mexico, as part of a major restructuring programme.

It is hoped the move will save US$70m next year and US$160m annually once completed, the soft drinks bottler (PBG) announced today (18 November).

The firm also cut earnings targets for the full year, to a range of $2.20 to $2.26 per share instead of the previous $2.32 to $2.38. It blamed weaker foreign currencies and higher than expected costs related to its recent bond issuance.

The move underlines a tough period for the soft drinks sector, as the economic downturn worsens.

Most of PBG's job cuts are expected in Mexico, where the group said 2,200 employees would be affected by a plan to close three plants and 30 distribution centres.

Streamlining in Europe will see another 200 jobs cut across PBG markets there, the group said, while 750 jobs are expected to go in the US and Canada.

On Mexico, PBG chairman and CEO Eric Foss said the firm has been conducting a "comprehensive strategic review" for the past several months. The group also faces a pre-tax impairment charge of $412m in the country, related to a below par performance of its Electropura water business. 

Further details of the restructuring plan will be made available in PBG's fourth quarter results statement, PBG said. 

It added: "The company expects that the foreign currency weakness and increased interest cost will continue into 2009."

A pre-tax charge of $80m to $100m is expected in the fourth quarter of 2008.