Pepsi Bottling: good results but shares dip

- Last updated on GMT

Related tags: Pepsi bottling, Pepsico, Us

Shares of Pepsi Bottling have dropped rapidly despite a strong set
of financial results, according to a report by CBS News.

Shares of Pepsi Bottling have dropped rapidly despite a strong set of financial results, according to a report by CBS News.

Shares fell some 16 per cent after executives of the bottler sounded a cautious note about pricing and volume trends during what is sure to be a competitive end to summer - the biggest selling season for beverage makers. Meanwhile rival Coca-Cola Bottling also suffered a fall in share prices after the news, with shares down by 6 per cent on the same day.

The markdown came despite a 21 per cent surge in second-quarter profits to $139 million (€139.7m) - in line with a forecast that the company gave in May. The results also matched with the consensus analysts' reports.

Total sales rose 7.2 per cent to $2.21 billion from $2.06 billion in the year ago period. Worldwide and US volume climbed a disappointing 2 per cent against an analyst-driven projection of 3 per cent. The company said the lower numbers came at the hands of cold weather in the US, an overall weakness in its US cold drink business - the company called it "essentially flat"​ - and poor volume results in Spain and Canada. Worldwide net revenue per case grew 3 per cent.

On a conference call with investors, executives offered a tepid view of the remaining weeks of summer, thanks to competitive pricing primarily at supermarkets from its biggest rival Coca-Cola. The battle will escalate too after Pepsi introduces Pepsi Blue, though the company believes the new berry-flavoured rendition of its classic drink will help restore growth trends in the US.

"After several years of aggressively increasing soft drink pricing, the 2002 summer selling season appears to have adopted a more competitive tone,"​ said Skip Carpenter, analyst at Thomas Weisel Partners.

"Profit growth for US bottlers benefited from the higher pricing from 1999 to 2001, thus if a more competitive pricing environment emerges in 2002, bottling profits could be at risk,"​ added Carpenter, who maintained his "market perform" rating.

Related topics: Smart Packaging

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