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, reported 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' estimate of 10.2 billion pesos, while total volumes increased by 2%.

Net sales of Arca, Latin America's No. 2 Coca-Cola bottler after Coca-Cola FEMSA, shrunk by 5% over the period to 50.0 billion pesos, below the forecast of 52.4 billion. Minus foreign-exchange effects, revenue grew 7%.

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

Arca 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.

The company expects to maintain its pricing strategy and will continue to adjust prices at least in line with inflation in each of its markets as the year progresses, Chief Executive Arturo Gutierrez said on a call with analysts.

This year, Gutierrez said, the company expects current momentum to continue and foresees "sustained growth in our key markets, such as Mexico, Peru and the U.S."

"Overall, the company continues to show good pricing and volume execution in key markets," analysts at J.P. Morgan wrote.

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; Additional reporting by Brendan O'Boyle and Aida Pelaez-Fernandez; Editing by Varun H K and Leslie Adler)