Beverage Industry

Dr Pepper Snapple Group reports Q1 2014 results

Net sales and volume both up 1 percent

April 23, 2014

Dr Pepper Snapple Group Inc., Plano, Texas, reported that net sales and volume both increased 1 percent, respectively. These increases were impacted by favorable product and package mix and net pricing, partially offset by unfavorable segment mix and 1 percentage point of foreign currency.

Reported segment operating profit in the quarter increased 14 percent, or $40 million, on net sales growth, lower commodity costs — including an unfavorable year-over-year last-in, first-out comparison — and ongoing productivity improvements. Reported income from operations for the quarter was $260 million, including $12 million of unrealized commodity mark-to-market gains. Core income from operations was $248 million, up 21.6 percent compared with the prior-year period.

Bottler case sales in the quarter declined 1 percent, with carbonated soft drinks (CSDs) declining 1 percent and non-carbonated beverages (NCBs) declining 2 percent.

The CSD category continued to face significant headwinds, with Dr Pepper volume decreasing 4 percent. The company’s Core 4 brands, which include the Ten platform, were flat as a mid-single digit increase in Canada Dry was partially offset by a mid-single-digit decrease in Sunkist soda and a low-single-digit decline in A&W. 7UP was flat in the quarter, while Peñafiel increased double-digits due to new product innovation, and Squirt declined high-single digits. Fountain foodservice volume decreased 3 percent in the quarter.

In the NCB segment, Hawaiian Punch volume declined 8 percent facing category headwinds and increased competitive activity. Mott’s declined 1 percent in the quarter, lapping double-digit growth in the prior year. These declines were partially offset by a 2 percent increase in Snapple and a 3 percent increase in Clamato.

Among beverage concentrates, net sales for the quarter increased 8 percent on a 3 percent volume increase driven by concentrate shipment timing, concentrate price increases taken at the beginning of the year, and favorable discounts driven by shipment volume timing.

“We had a strong start to the year,” said President and Chief Executive Officer Larry Young in a statement. “Once again, our teams remained focused and executed against our strategy in a highly competitive and challenged environment. We maintained distribution and availability across our key CSD brands and packages and gained distribution on our key juice and tea brands and packages. We continued to invest behind our well-loved brands and engaged with our consumers and shoppers through innovative marketing programs. Rapid, continuous improvement continues to be embedded throughout the organization, and we’re making good progress on our lean tracks. Our 2014 priorities remain unchanged. Our teams will continue to build the Ten platform with programming focused on driving awareness and trial, provide consumers with a range of products that meet their evolving needs, and execute with excellence in the marketplace.”