The Pepsi Bottling Group, Inc. (PBG) today reported first quarter 2009 net income of $57m, or diluted earnings per share (EPS) of $0.27. This includes a net after-tax gain of $36m, or $0.17 per share, as a result of a benefit from the settlement of tax audits and previously announced restructuring charges. This compares to net income of $28 million, or $0.12 per diluted share, that the Company reported in the first quarter of 2008. This included a net after-tax charge of $1.4 million, or $0.01 per share, from restructuring and asset disposal charges.
“PBG is off to a good start in 2009 despite operating in a challenging macroeconomic environment. Successful execution of our global pricing strategy, as well as our cost and productivity initiatives, allowed us to exceed our profit and earnings objectives for the quarter,” said Eric Foss, PBG chairman and chief executive officer. “We also possess a healthy balance sheet and ample liquidity, which enabled us to increase our dividend for the sixth consecutive year and make important investments in the future growth of our business.
“The strength of our first quarter performance and the confidence we have in our plans for the remainder of 2009 has led us to raise our full-year earnings and operating free cash flow guidance,” Foss continued.
“Our efforts to strengthen our brand portfolio, transform our performance through operational excellence, and capitalize on geographic growth opportunities will position PBG well to achieve greater success going forward.
“Earlier this week, PepsiCo announced its intention to acquire all of the outstanding shares of PBG’s common stock that it doesn’t already own,” Foss added.
“Our Board has appointed a special committee of independent directors to evaluate this proposal and will respond in due course.”
Reported COGS per case were flat in the first quarter, as the benefit from foreign currency offset increases in input costs. Currency neutral COGS per case increased 5%.
On both a reported and comparable basis, PBG’s SD&A expenses declined 7% in the first quarter. Reported SD&A in the U.S. and Canada segment improved 3%. SD&A expenses improved one percent on a currency neutral basis, with the U.S. and Canada segment flat due to the continued success of cost and productivity initiatives.
For 2009, PBG is raising its full-year earnings guidance. Comparable diluted EPS are now forecasted to be $2.20 to $2.30. This includes an $0.18 per share negative impact from translational foreign currency headwinds. The Company forecasts currency neutral top-line growth in the low-single digits. Currency neutral operating profit is also expected to grow in the low-single digits for the year.
Operating free cash flow is now expected to be approximately $500m, an increase of $50m from previous guidance, including increased pension funding and foreign currency headwinds. The Company anticipates capital expenditures of about $550 to $600m.
Source: Pepsi Bottling Group
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