Trouble south of the border put a damper on Pepsi Bottling Group's (NYSE:PBG) third-quarter results. The largest bottler for PepsiCo (NYSE:PEP) warned back in early September that increased competition in Mexico had led to decreased volume there, which in turn dragged down results.

Overall, earnings for the period grew 2.8% to $183 million from $178 million. Per share, Pepsi Bottling netted $0.67, a penny ahead of reduced expectations, compared to $0.61 a share a year ago. Total revenues increased 14% to $2.8 billion.

Unit case volumes, however, didn't fare as well, coming in flat both worldwide and for the U.S. Europe was a bright spot, with volumes up 7%, but that wasn't enough to offset flat or declining results elsewhere.

As predicted, case volumes in Mexico declined 5%. Pepsi Bottling, which only acquired the biggest bottler in Mexico in November 2002, is still trying to sort out how best to compete in that market against a myriad of cheaper sodas and Coca-Cola (NYSE:KO). It's changed the packaging on its products, but a fierce competition has kept results in check.

For the full year, Pepsi anticipates earning $1.55-$1.57 per share, below its previous outlook for $1.61-$1.67, which drops earnings growth to around 6% from 10%.

Shares have fallen from a 52-week high of $29.50 to $20.50, as the company has seen little to no overall volume growth for most of the year and has tempered expectations. That leaves Pepsi Bottling shares trading at a forward P/E of around 13.