MEXICO CITY, Feb 8 (Reuters) -

Mexican bottler Arca Continental on Thursday posted fourth-quarter net income ahead of forecasts, helped by higher volumes and improved U.S. margins on the back of an extended policy of price hikes.

Arca, which sells bottled water, soft drinks and snacks across the Americas, posted a 15% growth in net income at 4.5 billion pesos ($265 million) for the last three months of 2023, above analysts' estimate of 4.1 billion pesos as per LSEG.

The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) remained steady at 10.0 billion pesos, a touch below analysts' 10.2-billion-peso estimate, while total volumes increased by 2%.

Arca's net sales, however, shrunk by 5% over the period to 50.0 billion pesos, below the forecast of 52.4 billion. However, the company said revenue grew 7% if foreign exchange effects are stripped out.

Mexico's peso appreciated 13% against the dollar in 2023, shrinking peso-denominated earnings for firms across the country selling their products abroad.

While Arca sells the bulk of its products in Mexico, it is also present in Peru, Ecuador, Argentina and the United States - the latter which accounts for approximately a fifth of sales and just over a quarter of the company's EBITDA.

Arca, Latin America's No. 2 Coca-Cola bottler after Coca-Cola FEMSA, has been hiking prices "in line or above" inflation to offset the strong peso and higher material costs.

"Our price-pack strategy to achieve high-margin stock keeping units enabled us to post solid financial results," Arca said in a statement, pointing to its U.S. price increases and "optimized" promotional spending.

Its Mexico profit margin edged up 70 basis points, helped by price hikes and strong cola sales, while its U.S. margin grew by 30 bps, boosted by sales of Monster energy drinks and Gold Peak iced tea.

Arca sells packaged snacks such as nuts and popcorn as well as bottled drinks from brands such as Coca-Cola, Fanta and Topo Chico. ($1 = 16.9666 Mexican pesos at end-December) (Reporting by Sarah Morland and Noe Torres; Editing by Varun H K)