Jan. 30 (Bloomberg) -- Pepsi Bottling Group Inc., the world's second-largest soft-drink distributor, said fourth- quarter profit rose 80 percent on increased sales in Europe and a tax gain.

Net income jumped to $133 million, or 55 cents a share, from $74 million, or 30 cents, a year earlier, Somers, New York-based Pepsi Bottling said today in a statement. First- quarter profit will be between 9 cents and 11 cents a share, the company said, less than the 12-cent analyst estimate.

The company reiterated its 2007 forecast of as much as $2 a share as growth in emerging markets balanced ``unprecedented'' costs for raw materials such as aluminum and drink concentrate. Chief Executive Officer Eric Foss promoted drinks including Pepsi-Cola in countries such as Russia and Turkey, which lifted volume in Europe 6 percent.

``It's good news for Pepsi if these emerging markets remain strong,'' said Marc Inboden, who helps manage $400 million including shares of parent PepsiCo Inc. at Beese Fulmer & Pincoe Inc. in Canton, Ohio. ``Cost pressures concern me, and it's something I'm keeping an eye on.''

Expenses on raw materials may rise by $225 million in 2007, Foss reiterated today. That's more than double the increase of $100 million the company recorded last year.

Shares of Pepsi Bottling, which is 43 percent owned by PepsiCo, fell 9 cents to $31.66 at 4 p.m. in New York Stock Exchange composite trading. They gained 8 percent last year, compared with a 6.5 percent gain by Coca-Cola Enterprises Inc.

Fourth Quarter

Fourth-quarter Sales increased 2.8 percent to $3.77 billion, the company said.

Excluding a $55 million tax gain related to a favorable Internal Revenue Service ruling that allowed the company to reverse tax reserves, profit was 33 cents a share. That beat 32-cent average estimate of 13 analysts surveyed by Bloomberg.

Fourth-quarter profit was helped by a lower overall tax rate of 27 percent for the quarter, below the 32 percent estimated by John Faucher, an analyst with J.P. Morgan Securities Inc. in New York. That added 3 cents a share to earnings, Faucher said today in a research note.

Profit for the first six months will be 71 to 75 cents, Chief Financial Officer Al Drewes said on a conference call with analysts and investors. That's below the 77-cent Bloomberg estimate.

Cost Controls

Pepsi Bottling is trying to lower costs by using lighter- weight plastic bottles for some drinks, improving delivery schedules and increasing capacity on beverage production lines, Foss said.

The company reaffirmed its volume forecast for 2007, with worldwide volume up as much as 2 percent, and U.S. volume rising as much as 1 percent. Revenue per case may increase 3 percent to 4 percent worldwide, the company said.

During the fourth quarter, revenue per case increased 3 percent worldwide. Global volume rose 2 percent, helped by gains of at least 10 percent in both Turkey and Russia.

U.S. volume increased 2 percent, as water volume rose 15 percent during the fourth quarter and Lipton tea volume jumped more than 40 percent. New drinks such as Dole Sparklers juice and Sierra Mist Cranberry Splash soda lifted sales, Foss said, while soft drink volume in the U.S. dropped 2 percent for the quarter.

Mexico Volume

Volume in Mexico was down 1 percent for the quarter, which was better than the 2 percent drop expected by J.P. Morgan's Faucher.

Pepsi Bottling last year acquired Mexican bottler Bepidas Purificadas SA to increase distribution in several northwestern Mexican states.

The company in early January agreed to buy distribution and bottling rights for some Cadbury Schweppes Plc drinks from closely held Nor-Cal Beverage Co. to add Dr Pepper, Squirt and Hawaiian Punch in parts of Northern California.

PepsiCo recently began selling vitamin-enhanced Aquafina Alive water, and the company plans cherry-flavored Mountain Dew Amp energy drinks and a new caramel-flavored version of its calorie-free Pepsi Jazz soda, Foss said.

To contact the reporter on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net.

Last Updated: January 30, 2007 16:14 EST