Pepsi Bottling Group Inc
reported a slightly higher-than-expected quarterly profit on Tuesday, as price increases and easing commodity costs helped offset falling sales volume.

The largest bottler of PepsiCo Inc
drinks also said it remained comfortable with its outlook for 2009 earnings at the top end of its prior range of $2.30 to $2.40 per share.

Shares rose 1.3 percent to $37.80 in premarket trade.

We're on track to deliver a very good year despite the challenging macroeconomic environment, said Pepsi Bottling Chief Executive Eric Foss.

The company, which bottles and sells Pepsi drinks in North America, Greece, Russia, Spain and Turkey, is being acquired by PepsiCo as the second-largest soft drink maker after Coca-Cola Co seeks to cut costs in North America.

The $7.8 billion acquisition includes Pepsi's second-largest bottler, PepsiAmericas Inc
. It is expected to close in late 2009 or early 2010. The bottlers' European operations will be managed by PepsiCo Europe once the acquisitions are completed.

PepsiCo said on Monday that Foss would run the new integrated North American bottling business as it competes with the Coke bottling system that remains decentralized.


Pepsi Bottling said net income was $254 million, or $1.14 per share, in the third quarter, up from $231 million, or $1.06 per share, a year earlier.

Excluding items, earnings were $1.06 per share. Analysts on average were expecting $1.05 per share, excluding items, according to Thomson Reuters I/B/E/S.

Net revenue dropped nearly 5 percent to $3.63 billion, falling short of analysts' average expectation for $3.73 billion.

Total sales by volume fell 2 percent, as a 1 percent gain in Mexico was offset by declines of 5 percent in Europe and 1 percent in the United States and Canada.

Excluding the impact of currency fluctuations, revenue per case rose 4 percent, helped by increases of 3 percent in the United States and Canada, 7 percent in Europe and 6 percent in Mexico.

The company raised its operating free cash flow forecast to $550 million, $100 million higher than its earlier expectation. (Editing by Derek Caney, Dave Zimmerman)