Dr Pepper Snapple Group Inc. (DPS), Plano, Texas, reported third quarter net sales of $1.68 billion, a 3 percent increase on favorable product and package mix, a 1 percent increase in sales volumes and higher pricing. Net sales growth was reduced in the quarter by 1 percentage-point of unfavorable foreign currency translation.
Reported segment operating profit (SOP) increased 3 percent, or $12 million, on net sales growth, lower logistics costs and ongoing productivity improvements, which were partially offset by a $16 million increase in planned marketing investments and increases in certain other operating expenses.
Reported income from operations for the quarter was $373 million, which included $9 million in unrealized commodity mark-to-market gains and a $5 million non-cash gain on the step-acquisition of its joint venture Aguafiel business in Mexico. Reported income from operations was $337 million in the prior year period, which included $9 million in unrealized commodity mark-to-market losses. Core income from operations for the quarter was $364 million, up 5 percent, and represented 21.7 percent of net sales compared with 21.3 percent in the prior year period.
Year-to-date, reported net sales of $4.86 billion increased 3 percent. Reported income from operations was $1.10 billion, including $41 million in unrealized commodity mark-to-market gains. Foreign currency translation negatively impacted reported net sales and reported income from operations by 1 percent. Reported income from operations in the prior year period was $976 million, which included $5 million in unrealized commodity mark-to-market losses. Core income from operations was $1.06 billion, up 8 percent, representing 21.7 percent of net sales compared with 20.8 percent in the prior year.
“I'm proud of our teams for continuing to drive strong performance across our portfolio in a competitive and fragmented market,” DPS President and Chief Executive Officer Larry Young said in a statement. “We gained both dollar and volume share in our largest category, [carbonated soft drinks] (CSDs), in Nielsen measured markets, and our strategy of driving aligned communication and execution across our priority brands is driving positive results. Our allied brand partnerships are allowing us to compete in fast growing categories, and rapid continuous improvement (RCI) continues to be the foundation on which the organization operates.”
For the quarter, bottler case sales volume increased 2 percent, with CSDs increasing 2 percent and non-carbonated beverages (NCBs) flat.
By geography, U.S. and Canada volume increased 1 percent, and Mexico and the Caribbean volume increased 4 percent.
In CSDs, Dr Pepper increased 1 percent driven by growth in fountain foodservice and bottle-can businesses. DPS’ Core 4 brands increased 2 percent, as a mid-single-digit increase in Canada Dry and a low single-digit increase in Sunkist were partially offset by low single-digit decreases in A&W and 7UP. Squirt increased 7 percent in the quarter on strong growth in both the U.S. and Mexico, and Schweppes grew 9 percent. Crush grew 4 percent, and Peñafiel grew 1 percent. Fountain foodservice volume increased 2 percent in the quarter.
In NCBs, the company’s water category grew 16 percent from strong growth in Bai brands, FIJI and Aguafiel. Clamato increased 5 percent in the quarter, and Snapple was flat. Hawaiian Punch decreased 6 percent primarily as a result of reduced promotional activity and higher pricing for our single-serve packages, and Mott's decreased 6 percent in the quarter, as growth in sauce was more than offset by decreases in juice.
Sales volumes increased 1 percent in the quarter and year-to-date.
Net sales increased 5 percent in the quarter on concentrate price increases taken earlier in the year, favorable product mix and a 1 percent increase in concentrate shipments. SOP was flat, as net sales growth was offset by a $10 million increase in planned marketing investments.
Net sales increased 4 percent in the quarter on favorable product and package mix, lower discounts driven by a favorable trade accrual adjustment and higher pricing. SOP increased 7 percent on net sales growth, lower logistics costs and ongoing productivity improvements. These increases were partially offset by a $6 million increase in planned marketing investments and increases in certain other operating expenses.
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