Plano, Texas-based Dr Pepper Snapple Group (DPS) released it second quarter 2016 financial results. For the quarter, reported net sales increased 2 percent based on favorable product and package mix, net price increases and a 1 percent increase in sales volumes, which were partially offset by unfavorable segment mix. Net sales growth was further reduced by 2 percentage points as a result of unfavorable foreign currency translation.
Year-to-date, reported net sales increased 2 percent. Reported income from operations was $725 million, including $32 million in unrealized commodity market-to-market gains. Reported income from operations in the prior-year-period was $639 million, which included $4 million in unrealized commodity mark-to-market gains. Core income from operations was $693 million, up 9 percent, representing 21.8 percent of net sales compared with 20.5 percent in the prior year.
“Our teams delivered another solid quarter of growth in what continues to be a competitive industry,” said Larry Young, DPS president and chief executive officer, in a statement. “We focused relentlessly on driving integrated communication and execution across our key priority brands. Our partnerships with allied brands are driving meaningful growth, and Rapid Continuous Improvement (RCI) continues to provide tangible financial benefits to the business.”
For the quarter, bottler case sales volume increased 1 percent, with carbonated soft drinks (CSDs) increasing 1 percent and non-carbonated beverages (NCBs) increasing 2 percent. By geography, U.S. and Canada volume was flat, but in Mexico and the Caribbean, volume increased 6 percent.
In CSDs, Squirt increased 8 percent in the quarter due to strong growth in the United States and Mexico, and Schweppes grew 9 percent on increased promotional activity at a large retailer. Peñafiel and Crush each grew 4 percent. Brand Dr Pepper decreased 1 percent, as growth in fountain foodservice business was more than offset by declines in diet. The company’s Core 4 brands decreased 1 percent, as a mid single-digit increase in Canada Dry was more than offset by a 10 percent decrease in 7UP and low single-digit decreases in both A&W and Sunkist sodas. Fountain foodservice volume increased 1 percent in the quarter.
In NCBs, the company’s bottled water portfolio grew 25 percent on strong growth from Bai Brands, Aguafiel and Fiji. Clamato increased 14 percent in the quarter on distribution gains and increased promotional activity, while Hawaiian Punch decreased 5 percent primarily on price increases on single-serve packages. Snapple decreased 2 percent, as growth from product innovation was more than offset by the effect of liquidating certain Snapple inventories a year ago. Mott’s was flat in the quarter, as growth in sauce was fully offset by decreases in juice.