Pepsi Bottling Stock Tumbles on Lowered Earnings Outlook

NEW YORK — Shares of Pepsi Bottling Group Inc. (NYSE:PBG – News) plunged Wednesday after the bottler said it expects the number of drinks it will sell in the U.S. in the second quarter to be flat with year-earlier levels.

The company’s executives gave the second-quarter U.S. volume forecast during a conference call with analysts Wednesday. They declined to comment more specifically on expectations for the second quarter.

Pepsi Bottling Group, the largest bottler of PepsiCo Inc.’s (PEP) soft drinks, late Tuesday said its first-quarter results would fall short of the company’s prior forecast after snow disrupted deliveries. The company also is facing a weak retail environment and may have been too optimistic in its assumptions, analysts said.

First-quarter net income will be 12 cents to 14 cents a share, or seven cents less than previously expected, the company said. Analysts surveyed by Thomson First Call (News – Websites) had expected 19 cents.

First-quarter volume will fall 3% to 4% in the quarter.

Pepsi Bottling cut the range of its annual forecast for net income by seven cents, to $1.61 to $1.67 a share.

Still, the company remains confident about the prices of its products in the U.S., executives said.

Pepsi Bottling raised product prices in the fourth quarter and first quarter. The price increases are holding in most sales territories, and are expected to increase net revenue per case by about 2%.

Pepsi Bottling expects its constant territory worldwide net revenue per case to be flat to up 1% for the quarter.

Pepsi Bottling shares were off sharply on the news. The stock traded Wednesday morning on the New York Stock Exchange (News – Websites) at $17.65, down $4.55, or 21%. In addition, PepsiCo shares shed $1.15, or 3%, at $36.90.

The news also hurt shares of Coca-Cola Co. (NYSE:KO – News) and its largest bottler, Coca-Cola Enterprises Inc. (NYSE:CCE – News) , as investors feared the companies will see similar weather-related trends. In Wednesday morning trading on the New York Stock Exchange, Coca-Cola Enterprises shares were off 86 cents, or 4.5%, at $ 18.25, while shares of Coca-Cola, a component of the Dow Jones Industrial Average, were down 96 cents, or 2.5%, at $37.41.

Pepsi Bottling Group had to jump high hurdles to achieve its first-quarter targets. Last year, the company’s sales were helped by the introduction of products, which spurred consumer interest for Pepsi soft drinks. Also, the Easter holiday will fall in the second quarter of this year rather than in the first quarter, as it did a year earlier.

The company expects product news this summer, when PepsiCo