Pepsi Bottling Group Inc. (PBG) on Tuesday reported a profit for the fourth quarter, compared to a loss in the year-ago period when results were negatively impacted by impairment charges. However, revenues were flat with the year-ago period as volume declined.
The distributor of Pepsi-cola beverages said that net income for the fourth quarter attributable to the company was $90 million or $0.40 per share, compared to net loss of $271 million or $1.28 per share in the corresponding period last year.
The Somers, New York-based company said that the latest quarter results included a net provision expense, net of non-controlling interest, of $68 million or $0.31 per share, reflecting a significant tax law change in Mexico that required the company to re-measure its deferred tax assets and liabilities. Meanwhile, a tax law change in Canada resulted in a tax provision benefit, net of non-controlling interest, of $7 million or $0.03 per share.
The year-ago quarter's results include non-cash impairment charges of $412 million or $1.26 per share primarily related to distribution rights and brands for the Electropura water business in Mexico.
On a comparable basis, the company's earnings per share for the latest quarter were $0.59. On average, nine analysts polled by Thomson Reuters expected the company to earn $0.43 per share for the quarter. Analysts' estimates typically exclude special items.
PBG reported quarterly net revenues of $3.805 billion, down slightly from $3.809 billion in the prior-year quarter. Analysts had a consensus revenue estimate of $3.82 billion for the quarter.
On a currency neutral basis too, the company's worldwide revenue for the quarter was flat with the year-ago period.
Fourth-quarter worldwide net revenue per case increased 3% on a reported basis, while it was flat on a currency neutral basis. The company reported a 3% decline in its total worldwide physical case volume for the fourth quarter. PBG's operating income for the latest quarter was $186 million compared to operating loss of $264 million in the same period last year.
Among PBG's rivals, Coca-Cola Bottling Co. Consolidated (COKE), which is about 27.1% owned by the Coca-Cola Co. (KO), is expected by analysts to report earnings of $0.13 per share for the fourth quarter.
Coca-Cola Enterprises Inc. (CCE) is slated to report its financial results for the fourth quarter on February 10, 2010. Analysts expect the company to report earnings of $0.21 per share on revenues of $5.21 billion for the quarter. In December, the company raised its earnings outlook for fiscal year 2009 to a range of $1.56-$1.59 per share from the prior outlook of $1.54-$1.57 per share. Analysts expect earnings of $1.58 per share.
In August 2009, food and beverage giant PepsiCo Inc. (PEP) reached definitive agreements with its two largest anchor bottlers, PBG and PepsiAmericas (PAS), to acquire the remaining outstanding shares of common stock it does not already own in the bottlers for about $7.8 billion in cash or stock.
The acquisitions, which would create one of the largest food and beverage companies globally, are anticipated to close in the first quarter of 2010, and are estimated to create annual pre-tax synergies of over $300 million by 2012.
PBG said that in connection with this transaction, it has retained certain external advisors and expects to incur aggregate fees in the range of $50 million-$60 million.
In late January, PBG said it entered into a letter of intent to acquire Pepsi-Cola Bottling Co. of Yuba City, Inc., a Pepsi-Cola franchised bottler based in northern California.
For fiscal year 2009, net income attributable to PBG rose to $612 million or $2.77 per share from $162 million or $0.74 per share in the previous year.
Comparable earnings per share for the year was $2.55, up from $2.27 last year, and exceeding the company's projection for earnings in a range of $2.30-$2.40. Analysts expected the company to earn $2.38 per share for the year.
Net revenues for the year were $13.22 billion, down 4% from $13.80 billion in the prior year, and missed analysts' consensus revenue estimate for the year of $13.26 billion. The company said it achieved $350 million in cost and productivity savings in the year.
Eric Foss, PBG Chairman and Chief Executive Officer, said, "At the beginning of 2009, we expressed optimism that PBG would continue to perform well in the marketplace despite ongoing macroeconomic challenges. Our ability to achieve our full year targets demonstrates that our optimism was justified, as we executed our game plan effectively and delivered a strong set of financial results."
Operating free cash flow for the year was $578 million, excluding advisory fees related to the pending PepsiCo transaction. It however includes $229 million in pension funding and $62 million in one-time pre-tax restructuring charges.
PBG closed Monday's regular trading session at $37.63, up $0.43 on a volume of 1.55 million shares. In the past 52 weeks, the stock has been trading in a range of $16.82-$38.74.
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