Just what the doctor ordered: Dr. Pepper Snapple’s first-quarter earnings rise

Dr. Pepper Snapple Group Inc.'s first-quarter profits rose 46 percent from last year.
Dr. Pepper Snapple Group Inc.’s first-quarter profits rose 46 percent from last year.

Shares of Dr. Pepper Snapple Group Inc. soared nearly 4 percent as the company reported a 46 percent increase in first-quarter earnings due to cheaper production costs that more than offset lower sales.

The beverage maker earned $155 million, or 78 cents per diluted share in the quarter that ended March 31, up from $106 million, or 51 cents per diluted share from the year-ago period. The company’s earnings per share adjusted for unrealized commodity gains, at 74 cents, far exceeded the analysts’ consensus estimate of 59 cents, according to Zacks Investment Research.

The Plano, Texas-based company, which manufactures Dr. Pepper, Hawaiian Punch, Mott’s, Sunkist and 7up, said lower commodity prices helped push production costs down 6.1 percent from the first quarter of 2013, which helped boost profits.

President and CEO Larry Young said Wednesday in a conference call, “We’re very encouraged by our start in 2014. The teams once again executed our strategy against continued headwinds against carbonated soft drinks.”

Its most popular drink, Dr. Pepper, decreased in volume by 4 percent, while Canada Dry had a mid-single digit increase, according to the release. Sunkist soda, however, had a low-single digit decline. 7Up sales were flat for the first quarter. The biggest sales decrease was in Hawaiian Punch, which had an 8 percent decline due to increased competition from other drink makers.

“We’re not giving up,” Young said on the conference call. “We’ll never give up on Hawaiian Punch. It’s had some struggles out there on growth but also it’s a huge brand. There’s a lot more competition out there.”

Overall volume in the U.S. and Canada decreased 2 percent, but volume in Mexico and the Caribbean rose 3 percent.

Dr. Pepper had revenue of $1.39 billion for the first quarter, up minimally from the $1.38 billion it earned in the year-ago time frame.

The company expects a full year reported net sales to be flat  to up 1 percent and earnings per share to be in the $3.38 to $3.46 range.

Leave a Reply