Pepsi Bottling earnings will fall, company says

Pepsi Bottling Group Inc., the world's second-largest soda distributor, forecast profit will drop this year as the strengthening U.S. dollar hurts overseas sales.

Earnings excluding one-time items will fall to $2.15 to $2.25 a share, compared with $2.27 in 2008, Pepsi Bottling said in a statement today. Analysts on average anticipate earnings of $2.27 a share, according to 13 estimates compiled by Bloomberg. Profit and sales will rise excluding currency effects, the company said.

Pepsi Bottling, whose largest shareholder is PepsiCo Inc., followed Kraft Foods Inc. and Johnson & Johnson in saying profit will be cut when international revenue is translated into dollars. The stronger dollar will shave 18 cents a share off Pepsi Bottling's earnings in 2009, the company said.

The Somers, New York-based company also reported a fourth- quarter net loss of $271 million, or $1.28 a share, compared with a profit a year earlier. Excluding costs to cut jobs and an asset writedown, earnings of 30 cents a share beat the 25-cent average of analysts' estimates compiled by Bloomberg.

The better-than-expected results helped push Pepsi Bottling up 2.5 percent in New York Stock Exchange composite trading. The shares, which fell 43 percent last year, rose 52 cents to $21.23 at 11:35 a.m. PepsiCo owns 33 percent of Pepsi Bottling, its largest distributor.

Writedown, Job Cuts

The distributor wrote down the value of its Electropura water brand in Mexico by $412 million, or $1.26 a share, after sales fell. The company recorded an $83 million charge for costs to fire employees and restructure. Effects from currency translations hurt operating income by two percentage points in the quarter.

Pepsi Bottling said in November it would cut 3,150 jobs, or 4.6 percent of its workforce, to lower expenses as consumers buy fewer soft drinks in a global recession.

The amount of drinks sold worldwide fell 7 percent in the quarter, driven by a 7 percent drop in North America, a 6 percent decrease in Europe and a 7 percent decline in Mexico.

Commodity and raw-material costs jumped 3 percent per case as expenses for concentrate, packaging and sweetener grew, the company said.

Pepsi Bottling will raise U.S. prices after Labor Day in September, as it did in 2008, executives said during a conference call. The company will also test the sale of a 16-ounce can for 99 cents this quarter as it aims to attract cost-conscious consumers.

Sales of drinks in cold cases at retail stores have shown signs of improvement in the first quarter while drinks sold at restaurants remain "soft," executives said during the call.

(Pepsi Bottling executives will discuss earnings at 10 a.m. Eastern on {EVTS }.