Inflation to be noted in street after New Year by "comman man"?
Pepsi Bottling Backs Forecasts
Thu Dec 12, 8:07 PM ET Add Business - Reuters to My Yahoo!
By Jessica Wohl
NEW YORK (Reuters) - Pepsi Bottling Group Inc. (NYSE:PBG - news), the largest bottler of Pepsi drinks, on Thursday forecast flat U.S. volume for this quarter, due in part to bad weather on the East Coast, but said earnings should be in line with most analysts' estimates this year and in 2003.
The Somers, New York-based company said it expects fourth-quarter earnings of 16 cents to 18 cents per share. Analysts, on average, have an estimate of 17 cents per share, according to research firm Thomson First Call.
The outlook from Pepsi Bottling, which gave an upbeat overview of its plans to analysts and investors in New York, contrasted with lowered expectations the No. 2 Pepsi bottler, PepsiAmericas Inc. (NYSE:PAS - news), gave late on Thursday.
Minneapolis-based PepsiAmericas slashed its expectations for its fourth quarter and the year, due in part to soft U.S. carbonated soft drink volumes, particularly from Pepsi Blue, a relatively new drink it had expected stronger results from.
PEPSI BOTTLING CUTS VOLUME EXPECTATION FOR THE QUARTER
On a constant territory basis, which accounts for major 2001 acquisitions as if they occurred at the start of the year and excludes major 2002 acquisitions, Pepsi Bottling forecast U.S. physical case volume growth for the fourth quarter would be flat, as bad weather on the East Coast kept people out of stores and it lapped product launches in the year-ago quarter. Worldwide volume is expected to grow about 1 percent.
Pepsi Bottling said it expects to earn $1.42 to $1.45 a share this year, matching the analysts range of estimates. Analysts have a mean forecast of $1.44. The company earned 95 cents per share in 2001.
For 2003, Pepsi Bottling estimates earnings of $1.68 to $1.74 a share, versus analysts' forecasts of $1.61 to $1.75, with a mean target of $1.71, according to First Call.
PepsiCo Inc.'s (NYSE:PEP - news) Pepsi-Cola drinks, of which Pepsi Bottling is the top bottler, are facing competition from Coca-Cola Co. (NYSE:KO - news) drinks, particularly Vanilla Coke, which was introduced earlier this year.
The company plans to test a newly shaped 12-pack soft drink can package that can fit in refrigerators -- similar to a package Coca-Cola is already sold in. Pepsi Bottling plans to test it in Minnesota sometime in the first half of 2003. But Pepsi Bottling is still focused on its 24-can cube pack as a clearer way to boost sales, said Eric Foss, president of Pepsi Bottling's North American operations.
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Foss said his company sees water as a brandable category -- this is key because the company distributes Aquafina, the No. 1 single-serve bottled water in the United States.
It is also gearing up for promotions surrounding the Super Bowl and bringing Pepsi's Sierra Mist lemon-lime drink into the rest of its territory starting in January. Right now, Sierra Mist is in 65 percent of Pepsi Bottling's U.S. markets.
MEXICO COULD BE STRONG GROWTH AREA
Pepsi Bottling in November bought Pepsi-Gemex, the largest Pepsi bottler in Mexico, and expects strong growth, particularly in bottled water, from its Mexican operations in 2003. It is calling for 5 percent to 6 percent overall volume growth from Mexico next year, and 2 percent growth from its U.S. operations.
Pepsi Bottling faces a tough task breaking into many small stores in Mexico which often sell mostly -- or only -- Coca-Cola products. But the company has an edge as it can partner with Sabritas, the Mexican arm of snack food giant Frito-Lay, which retailers want on display in their stores.
Pepsi Bottling may look to acquire other bottlers in Mexico in the future, Chairman-elect and Chief Executive John Cahill said after the company's presentation. But for now, it is focused on growing volume and profitability with what it has.
Shares of Pepsi Bottling closed down 17 cents at $28.40 on the New York Stock Exchange (news - web sites). The shares have climbed almost 22 percent since the start of the year, while shares of Coca-Cola Enterprises Inc. (NYSE:CCE - news), the largest bottler of Coca-Cola drinks, are up about 14 percent over the same period.
PepsiAmericas' shares fell 16 cents to $15.30 before the company cut its forecast and said it would take a charge on revamping its distribution system in Central Europe. It now expects to earn 5 cents to 8 cents per share for the quarter, down from its earlier view of 18 cents to 20 cents and well below analysts' mean expectations of 19 cents per share, according to Thomson First Call.
PepsiCo, whose soft drinks include Pepsi and Mountain Dew, last week announced price hikes of 2 percent on beverage concentrates it sells to U.S. bottlers, starting Feb. 1.
The company usually raises the price of concentrates, which bottlers use in producing beverages, once a year.
Coca-Cola Enterprises said last week it expects profits to rise as much as 22 percent in 2003, aided by price increases and strong demand for new products such as Vanilla Coke. The Atlanta-based bottler and distributor said at that time it was aiming for price increases of "2 percent plus" in 2003.
Pepsi Bottling also is banking on raising prices to drive some growth.
Coca-Cola has a roughly 40 percent stake in Coca-Cola Enterprises. PepsiCo has a similar stake in Pepsi Bottling. |
