PepsiAmericas Inc has reported second-quarter 2009 net income of $61.4m, or diluted earnings per share (EPS) of $0.50. These results compare to second-quarter reported net income in 2008 of $90.8m, or $0.72 per share.
Net income in the second quarter of 2009 included various non-comparable items, which in total decreased net income by $29.6m, or EPS by $0.24, resulting in adjusted EPS of $0.74. Results were also negatively impacted by foreign currency movements, which reduced net income by $34.4m and EPS by $0.28.
The non-comparable results reflect a $0.19 EPS impact from the accelerated recognition of cumulative currency translation and pension adjustments per SFAS No160. This non-cash charge resulted from the deconsolidation of the Caribbean operation related to the formation of a strategic joint venture that combines the company's Caribbean bottling operations, excluding the Bahamas, with The Central America Beverage Corporation (Cabcorp).
Chairman and CEO, Robert C Pohlad, said: "We're pleased with our second-quarter results, which build on a solid first-quarter performance. The strength of our brands, combined with our continued strategic investments and consistent improvement in productivity, have provided us with the flexibility to manage through today's economic reality.
"As a result of our strong first-half performance, we're raising our adjusted full-year 2009 earnings outlook to $1.87 to $1.94. Across all geographies, we continue to execute on our global pricing plans to protect margins, increase distribution gains, expand our brand portfolio and drive costs out of our systems. Specifically in the US, we grew revenue by 5% and operating profits by 24% in the quarter. In central and eastern Europe, the combination of pricing and productivity helped to manage through significant foreign currency headwinds, although still having an impact on our worldwide operating results.
"As we begin the second half of the year, we believe we're well positioned to continue to capitalise on the capabilities of our organisation and the market opportunities ahead."
While operating income decreased 4% to $158.8m, including non-comparable items of $7.7m and $43.7m of foreign currency headwinds, strong pricing and cost management drove comparable operating income up 27% on a currency neutral basis.
The impact of foreign currency continues to have a significant impact on results, and in the second quarter, decreased revenue eight percentage points and decreased cost of goods sold and SD&A by five percentage points each.
- Revenue of $1.3bn decreased 6%, with currency neutral revenue up 1.8%, led by strong pricing across all markets.
- Volume declined 5%, reflecting central and eastern Europe (CEE) volume declines of 13% as the difficult economic environment continued, along with adverse weather conditions. US volume increased 0.2% and benefited from the calendar shift of the holidays.
- Cost of goods sold per unit was favourable to prior year by 1.4%, driven by the impact of foreign currency. On a currency neutral basis, cost of goods sold per unit increased 4%, reflecting raw material cost increases offset partly by system efficiencies. Cost of goods sold per unit excludes the impact of mark-to-market gains.
- Selling, delivery and administrative expenses (SD&A) were favourable to prior year quarter by 8%. Comparable SD&A on a currency neutral basis decreased 4% reflecting lower volume and the company's productivity and cost initiatives.
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