The group, which is the largest producer of Pepsi-branded beverages, said it had increased operating income by seven per cent, which it attributed to strong performances in both the mature and emerging markets in Europe. Operating margins remained unchanged for the period at 10 per cent. The company attributed the margins to a six per cent rise in the costs of materials, particularly for concentrate and sweetener, being offset by increased prices. PBG president Eric J. Foss believes the latest results reflect the importance to the company of offsetting increasing commodity and packaging costs. "This performance demonstrates again our ability to balance opportunities and challenges to consistently deliver great results," he stated. Foss pointed to a 10 per cent growth in operating income in the US and Canada, and strong top-line growth in Russia as key examples of the company's success during the quarter. Out of its three regional markets, The US and Canada continued to dominate the group's global sales. Sales in North America were up 4.3 per cent to $2.5bn over the second quarter last year . Operating income had also increased by 10 per cent to $302m. The level of growth within the region was kept down by stagnant volume growth in the US, attributed to three per cent decline in cold drinks volumes, coming up against a two per cent increase for volumes of its take-home segment. In its European operations sales rose 21 per cent to $468m and operating income increased 17 per cent to $12m. The company noted that volumes within the region were up by six per cent, aided specifically by its operations in Russia, which posted double digit growth for both carbonated and non-carbonated soft drinks. Sales in Mexico were also up, with a rise of 11 per cent to $365m, though operating income underwent a 27 per cent decline to $22m. The sales rise was explained in part by shifting consumer demand towards non-carbonated beverage ranges. With overall profits and income up for the period, the company remains confident over its outlook for the coming year. As a result, PBG said it had lifted its outlook for operating income to rise by seven to nine per cent, compared to five per cent to seven percent in an earlier projection.