Dr Pepper Tops Expectations as Bottled Water Drives Sales
April 27 2016 - 8:40AM
Dow Jones News
Dr Pepper Snapple Group Inc. offered upbeat guidance for the
year after beating first-quarter expectations, thanks to rising
demand for bottled water and growth in the company's fountain food
service business.
Shares rose 1.9% in light premarket trading. Over the past 12
months, the stock has gained 14% through Tuesday's close.
The Plano, Texas-based beverage company has continued to post
solid growth in its portfolio of noncarbonated drinks, featuring
Fiji and Aguafiel bottled water and tomato-and-seafood juice
Clamato. At the same time, Dr Pepper has managed to lift soda
volume, despite shifting consumer preference for drink and food
options that are perceived to be healthier and more natural.
Dr Pepper has managed to log higher volumes across its business,
in contrast to its larger rivals. Coca-Cola Co. last week said
growth slowed in the first three months of the year, with volumes
flat as a weakening global economy and increasing consumer
health-consciousness hurt sales. PepsiCo Inc., meanwhile, has
reported trouble in China and cautioned over weakening markets
across South America and parts of Europe.
In the first quarter, Dr Pepper logged 2% increases in both
carbonated soft drink and noncarbonated beverage volumes. A 22%
jump in water and a 10% rise in Clamato volume drove the gain in
the latter category. In the carbonated segment, volume in the
company's namesake brand rose 4% as Dr Pepper grew its footprint in
restaurants and other food service businesses. Higher promotions
helped drive higher demand for Schweppes and Crush brand drinks,
increases that together offset declines in 7UP and other soda
brands.
Dr Pepper said Mexico and the Caribbean continued to be bright
spots, with volume rising 6% in those regions and faster than the
2% clip in the U.S. and Canada. As a result of its international
exposure, which is far less than its rivals, unfavorable exchange
rates hit sales by 2%.
In all, Dr Pepper reported a profit of $182 million, or 96 cents
a share, up from $157 million, or 81 cents a share, a year earlier.
Revenue edged 2.5% higher to $1.49 billion.
Analysts projected 86 cents in adjusted earnings per share on
$1.47 billion in sales, according to Thomson Reuters.
For the year, Dr Pepper expects sales to rise 2%, higher than
the 1% increase it had earlier predicted. The company said adjusted
earnings per share are tracking at the high-end of its previously
issued range of $4.20 to $4.30.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
April 27, 2016 09:25 ET (13:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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