NEW YORK - 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 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 fell 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, which is being acquired by PepsiCo, its largest shareholder and supplier, still expects 2009 earnings to be near the high end of its prior forecast of $2.30 to $2.40 per share. It raised its operating free cash flow forecast to $550 million, $100 million higher than its earlier expectation.

PepsiCo said in August that it would buy Pepsi Bottling and PepsiAmericas Inc, its second-biggest bottler, for $7.8 billion, as it seeks to cut costs in North America.

The world's second-biggest soft drink maker behind Coca-Cola Co said on Monday that Pepsi Bottling Chief Executive Eric Foss would run its new integrated North American bottling business. (Reporting by Martinne Geller; Editing by Derek Caney)

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