US: PBG posts 7% rise in Q3 net income

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The Pepsi Bottling Group, Inc. (PBG) has reported a 7.3% rise in net income for the third quarter of 2005. The company yesterday (27 September) posted net income for the quarter of US$205m, or US$0.82 per share, against US$191m, or US$0.73 per share, in the corresponding quarter last year.

The results included a net pre-tax gain of US$16m, or US$0.04 of diluted EPS on an after-tax basis, from the high fructose corn syrup litigation settlement, while net income in the third quarter of 2004 included a US$0.02 gain from the settlement of certain international tax audits.

Operating income for the quarter grew by 10%, including a contribution of four percentage points from the corn syrup settlement, with one percentage point of the growth coming from currency translation. PBG has narrowed the range of its full-year EPS forecast to between US$1.83 and US$1.87.

PBG stated that worldwide physical case volumes grew by 5% on a constant territory basis in the third quarter. Its operations in the US and Canada both saw a 4% volume gain improvement. Volume sales in Mexico were up by 7%, while its European division recorded an 8% rise in volumes. Net revenue per case was up by 4%, with 1% of the rise stemming from foreign currency effects. Net revenue per case in the US was up by 2%.

"This was another great quarter in what is shaping up to be a very solid year for PBG," said PBG's chairman and CEO, John T. Cahill. "Our US business was the primary driver of our operating results in the third quarter with even better volume growth than we expected, as well as consistent rate improvement."

Cahill added that sales of non-carbonated beverages were up by more than 20% in the US, while Aquafina, Tropicana, Lipton teas and the company's energy drink portfolio all saw double-digit volume growth.

"Our European volume results were led by great growth in Russia and Turkey," Cahill said. "In Russia, trademark Pepsi continues to post impressive gains, fuelled by innovation such as Pepsi Ice Cream. Lipton Iced Tea has been a terrific addition to our portfolio with strong growth in every quarter since its introduction last year. In Turkey, our focus on building greater sales capability continues to pay dividends. Volume growth was strong in the third quarter with sales of Brand Pepsi up 14%. Overall, Europe is on track to deliver solid volume results for the full year."

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