US: PBG income down as Q1 volumes flat

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The Pepsi Bottling Group has reported a fall in first quarter 2005 net income to US$39m, or diluted earnings per share (EPS) of US$0.15. This compares to reported net income in first quarter 2004 of US$50m, or US$0.19 per diluted share.

Worldwide physical case volume was flat year-over-year on a constant territory basis as the company lapped very strong volume growth in the first quarter of 2004. In the US, PBG's volume was down 1% for the quarter, while the company's territories in Europe generated 3% volume growth. Volume was flat in PBG's Mexican business.

PBG did reported strong net revenue per case performance in the US, up 4% for the quarter. This growth reflects both rate increases and mix improvement, the company said. Worldwide, net revenue per case grew 3%.

"We're pleased with our performance in the first quarter, which positions us well to deliver on our commitments for the full year," said John T. Cahill, chairman and CEO of PBG. "We expected soft volume in the US this past quarter as we lapped last year's strong innovation in the form of Tropicana juice drinks and Pepsi Vanilla. Our non-carbonated portfolio, however, continued to grow with Aquafina delivering a high single-digit increase.

"The US pricing environment was favourable, and the rate increases we implemented in the fourth quarter of 2004 have held in the marketplace."

Cahill continued: "Our European businesses delivered solid revenue and volume results in the first quarter - which comprises only the months of January and February for our Europe and Mexico territories - with Turkey and Russia leading the way. In Turkey, we were able to capture our share of the overall category growth while, in Russia, our non-carbonated products fueled the volume increase. In Mexico, we experienced softer volume, primarily driven by our results in the metro Mexico City region. Recently, we've seen improvement in the pricing environment in several territories and the productivity initiatives we executed last year have begun to yield measurable results. As in the US, we have a solid innovation and promotion calendar planned for the second quarter, which should give a lift to our volume in Mexico."
The Company reaffirmed its full-year operational guidance and modified slightly its profit and earnings guidance. In fiscal 2005, PBG now expects to achieve pro forma diluted EPS of US$1.78 to US$1.84.

Worldwide constant territory volume is expected to grow 2% to 3% for the year and pro forma operating income will likely be up one to 3%.

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