Pepsi Bottling Cuts Outlook, Announces Restructure

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Pepsi Bottling Group Inc., which bottles Pepsi beverages, on Tuesday cut its 2008 profit outlook and announced a restructuring plan that will affect more than 3,000 jobs worldwide.

The bottler said it will refine its selling and service organization, lower its general and administrative expenses, make its supply chain more efficient and modify its defined benefit pension plans in the U.S. and Canada.

The company said about 750 jobs will be affected, and four facilities in the U.S. will be closed.

In Europe, Pepsi Bottling said it will "streamline its organization," which will affect about 200 jobs.

Pepsi Bottling said in Mexico, it will close three plants and 30 distribution centers and will eliminate 700 routes over time. Those changes will affect about 2,200 jobs, the company said.

The company said it will likely save between $150 million to $160 million each year once the restructuring is completed. Pepsi Bottling expects to save at least $70 million in 2009.

The cost of the program is expected to result in charges between $140 million and $170 million. In the fourth quarter, Pepsi Bottling said it will report a charge of between $80 million and $100 million, or 27 cents to 32 cents per share.

In addition to the restructuring charges, the company said it will report an impairment charge of $1.25 per share related to its business in Mexico due to a reduction in value of a water business there.

For 2008, the company now expects adjusted profit for the fiscal year between $2.20 and $2.26 per share. Previously, the company had expected adjusted earnings of $2.32 to $2.38 per share for the year.

Analysts polled by Thomson Reuters expect profit of $2.35 per share, on average.

The guidance reduction was due to the weakening of foreign currencies and higher-than-expected interest costs on the company's recent bond issuance.

Those items are expected to keep affecting profit in fiscal 2009, the company added.

Shares of Pepsi Bottling closed Monday at $19.91.

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