Pepsi Bottling Group 3rd-quarter profit declines

Profit slipped to $231 million, or $1.09 per share, from $260 million, or $1.16 per share, in the same quarter a year ago. The year-ago quarter included a tax gain of $31 million, or 14 cents per share.

Sales rose to $3.81 billion from $3.73 billion.

Analysts polled by Thomson Reuters expected profit of $1.04 per share and sales of $3.86 billion.

Morgan Stanley analyst Bill Pecoriello maintained an "Overweight" rating and a $42 price target.

"Pepsi Bottling Group continues to use all levers to navigate through the current environment," he wrote in a note to investors Tuesday.

Pepsi Bottling Group said total worldwide physical case volume slipped 6 percent, reflecting soft economic conditions. Volume in the U.S. and Canada declined 6 percent, European volume slipped 6 percent, and volume in Mexico lost 9 percent.

Still, Pecoriello noted that operating income was higher than expected for the company overall as well as in North America, Mexico and Europe.

For fiscal 2008, Pepsi Bottling Group modestly raised the lower end of its profit outlook range. The company forecast income between $2.32 and $2.38 per share, up from a prior outlook of $2.30 to $2.38 per share.

Pepsi in July said it expects to grow revenue by 5 percent to 6 percent over 2007 sales of $13.59 billion, implying revenue of $14.27 billion to $14.41 billion.