US: US volumes slip fails to hold back PepsiAmericas in Q2

By | 22 July 2008

PepsiAmericas has posted a healthy set of results for its second quarter, despite sliding volumes in the US.

The manufacturer, seller and distributor of PepsiCo beverages said today that net sales for the three months to the end of June rose by 12% year-on-year to US$1.34bn. While operating income increased by 15% to $165.5m from $144.2m, net income also climbed, to $90.8m from $78m a year earlier.

The sales lift in Q2 was credited primarily to acquisitions, strong pricing across all markets, and volume growth in Central and Eastern Europe. Volumes grew by 8.4%, with constant territory volume down 3.6% reflecting US volume declines.

In the US, net sales slipped by 1% to $917.2m resulting from volume declines of 5.4%. "This volume performance reflected an estimated 1 percentage point decrease from the Easter holiday shift, 1 percentage point decline from continued softness in lower margin Aquafina take home packages, 1 percentage point decline from teas, and a 1 percentage point decrease from the foodservice channel, including full service vending," the company said.

In Central and Eastern Europe, volumes grew by 51.7%, led by double digit growth in Romania and "modest" growth in Poland, while the Caribbean business reported a volume increase of 1.3% driven mainly by Puerto Rico.

For the first half of 2008, net sales were up to $2.44bn from $2.16bn, with operating income rising to $235.8m from $203.6m. Net income also headed north, to $115.5m from $98.6m.

"PepsiAmericas continues to execute its long-term strategy, which drove strong results for the quarter and helped deliver a good first half of the year," said company chairman and CEO Robert Pohlad. "Central and Eastern Europe - led by Poland, Romania and Ukraine - continues to fuel this growth. In the US, pricing and productivity gains helped to offset our volume performance. I'm pleased with the way we continue to manage our US business."

Going forward, the company said it was raising its 2008 adjusted EPS guidance to a range of between $1.92 and $1.96 from $1.77 to $1.83.

Sectors: Soft drinks, Water

Companies: PepsiAmericas, PepsiCo

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