The largest bottler of Pepsi drinks, the US-based Pepsi Bottling Group, has had to cut its forecasts for the first quarter and full year 2003, because of a shortfall in US volumes and profit.
PBG is now estimating earnings per share for the quarter at 12 cents to 14 cents, below market projections of around 19 cent.
“PBG is facing a number of challenges this quarter,” said John T. Cahill, PBG’s chairman and chief executive officer. “We have a significant innovation overlap from the first quarter of 2002 and a shift in the Easter holiday to our second quarter this year. During the past several weeks, these challenges have been compounded further by severe weather conditions in more than half of our US territories, resulting in a loss of a significant number of truck days to date this quarter. We now expect first quarter constant territory US volume to be down 5 to 6% and, consequently, worldwide volume will be down 3 to 4%.”
But the company said that the pricing environment in the US remained encouraging.
“The price increases PBG took in the US during the fourth quarter of 2002 and first quarter 2003 are holding in most territories and are expected to generate net revenue per case growth of about 2%. There will be no mix benefit in the quarter as PBG’s cold drink business will decline. As a result, PBG expects its constant territory US net revenue per case growth to be 2%. PBG’s constant territory worldwide net revenue per case is expected to be flat to 1% for the quarter.
Addressing the company’s expectations for the full year, Mr. Cahill said: “We remain confident in our plans for the remainder of the year with the bulk of our growth expected in the second half. As a result of our first quarter results to date and our concern that some volume weakness may continue in the second quarter, we are lowering our constant territory US volume growth projection to flat to 1% for the full year. We believe constant territory worldwide volume growth for 2003 will be 2 to 3%.”
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Cahill continued: “We have solid plans in place to accelerate growth, particularly in the highly profitable cold drink channel. Those plans will help us to achieve constant territory net revenue per case growth in the U.S. of two to three percent for the full year, with worldwide growth up one to two percent. We have flowed through the expected earnings shortfall from the first quarter to our full year numbers, resulting in a revised 2003 earnings per share forecast of $1.61 to $1.67.”
