Story URL:
Story Retrieval Date: 4/17/2015 11:25:42 AM CST

Top Stories

Kelly Nicastro/Medill

Dr Pepper Snapple Group 2013 Quarterly Earnings.

Dr Pepper Snapple Group reports strong earnings despite fizzling soft drinks sales

by Kelly Nicastro
Feb 12, 2014

Dr Pepper Snapple Group Inc. turned in stronger than expected fourth-quarter earnings Wednesday despite a decline in sales of its carbonated soft drinks category.

In the latest quarter, the Plano, Texas-based beverage producer reported net income of $156 million, or 78 cents per diluted share, down from $170 million, or 81 cents per share, a year ago.

Net sales slipped 1 percent to $1.46 billion from $1.48 billion.

Dr Pepper Snapple Group’s bottom line in the latest quarter was hurt by a big pension-related charge. Excluding special items, earnings per share were 97 cents -- significantly higher than the 84 cents per share analysts surveyed by Bloomberg LP had been anticipating.

Larry Young, president and CEO, said the latest quarter closed out what had been  a “challenging” year.

The soft-drink sector has come under pressure from growing concerns over the health effect of carbonated beverage, and Young said industry players are still examining how to respond. “I think all others in the industry are sitting down, figuring out how we do this the right way where it’s a win-win for everybody,” Young said.

Reflecting what the company called “significant headwinds” for the  the carbonated soft drinks category, sales volume of such drinks decreased 1 percent at Dr Pepper,caused in part by a “high single digit” decrease in volume sales of the company’s  7UP brand.  That decline was partially offset by a 3 percent increase in volume sales of Snapple.

“The environment as everybody knows is different today than it was three or four years ago,” said Martin Ellen, chief financial officer. “We hear what people are telling us, they want natural but we want to see if they buy the natural and where should we put the natural.”

For fiscal 2013, net income rose 3 percent to $624 million or $3.05 per diluted share from $629 million or $2.96 per diluted share.  Full year sales remained relatively flat with last year at $6.0 billion.

“Recognizing the growing consumer demand for healthier beverages, the company will continue to promote its existing low-calorie TEN in 2014 and test-market 60-calorie stevia-sweetened drinks during 2014,” said Morningstar analyst Thomas Mullarkey.

In addition to the flagship Dr Pepper Snapple brands, the company portfolio includes 7UP, A&W, Canada Dry, Clamato, Crush, Hawaiian Punch, Mott’s, Mr & Mrs T mixers, Penafiel, Rose’s, Schweppes, Squirt and Sunkist soda.

In New York Stock Exchange trading Wednesday, Dr Pepper Snapple shares closed up $1.10, or 2.3 percent, at $50.00.