US: PepsiAmericas credits acquisitions for strong Q3

By | 24 October 2007

PepsiAmericas has posted a lift in operating income for its third quarter, on the back of rising sales.

The PepsiCo manufacturer, seller and distributor said today (24 October) that operating income for the three months to the end of September rose by 27% year-on-year to US$140m. Sales in the quarter also increased, by 11% to $1.2bn.

Net profit for the quarter totalled $71.5m, up from $53.1m in the corresponding quarter a year earlier.

The company credited the strong performance to acquisitions, worldwide net pricing gains and "strong volume growth" in Central Europe.

While net sales in the US grew by 4% to $264.7m, PepsiAmericas noted a 4% slide in CSD volumes, "reflecting continued softness of this category". Volumes in the non-carbonated category, excluding water, were up by 11%, driven by the company's Lipton Tea brand. Volumes for the Aquafina water brand, however, were flat in the quarter.

Volumes in Central Europe, meanwhile, leapt by 25.2%, with acquisitions driving the bulk of the increase. Poor weather in the company's developing markets, including Poland, Hungary, Czech and Slovakia, led to slower volume growth in the region. Net sales in Central Europe rose 52%, the company noted, to $238.2m, with 24% of this growth being credited to acquisitions.

For the nine months of the year so far, PepsiAmericas has seen operating income rise to $343.6m from $280.2m, with sales following suit, up to $3.34bn from $2.98m. Net profit for the nine-month period stands at $170.1m from $132.2m.

"We are pleased with our third quarter performance, with all geographic segments contributing to our operating profit growth," said chairman and CEO, Robert Pohlad.

"Our European business continues to be our strongest contributor. Operating profits in Europe more than doubled, and we continued to see significant expansion in our operating margins due to our single serve focus and operating leverage.

"In the US, our successful execution against pricing and our single serve business helped offset higher costs and deliver operating profit growth in the quarter. While U.S. volume was slightly less than anticipated due to lower take home water, CSD trends improved and double digit growth in our non-carbonated portfolio excluding water continued."

As a result of the strong quarter, the company has raised its full-year outlook for 2007. Full-year adjusted EPS guidance has been upgraded to a range of $1.63 to $1.66, compared to an adjusted EPS of $1.32 in 2006.

In the third quarter last year, the company acquired the remaining interest in QABCL, its Romanian bottler. Additionally, in the third quarter of 2007, PepsiAmericas completed the acquisition, with PepsiCo, of an 80% stake in Sandora, the leading juice company in Ukraine.

Sectors: Soft drinks, Water

Companies: PepsiAmericas, PepsiCo

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