Dr Pepper Snapple Group Inc, the beverage maker spun off by Cadbury Plc reported higher than expected first-quarter profit and raised its 2009 forecast after increasing prices and cutting expenses.
The company said that earnings will be $1.70 to $1.78 a share this year, excluding some items, the Plano, Texas-based company said in a statement. The company predicted earnings of $1.67 a share in March as against analysts' projections of $1.65, the average of six estimates compiled by Bloomberg.
Profit for the quarter was 37 cents a share, which beat the 29 cent average of analysts' estimates. The company's stock rose 81 cents, or 3.8 per cent to $22.07 in NYSE composite trading. The company's shares have gained 36 per cent this year.
Net income surged 39 per cent to $132 million, or 52 cents a share, from $95 million, or 38 cents, a year earlier while sales of $1.26 billion beat the $1.24 billion average estimate of five analysts.
Chief executive officer Larry Young said in a statement, ''While the US economy remains weak, consumer sentiment appears to be improving and we're continuing to see a shift in purchase habits toward CSDs and other value offerings. Our portfolio of CSDs and value juices performed extremely well in the quarter led by strong gains in Crush distribution and Hawaiian Punch and solid Dr Pepper and Core 4 growth. Pressure remains at the premium end of the portfolio, especially with Snapple."
The company had said that about 15 per cent of Dr Pepper Snapple's net sales of beverage concentrates go through PepsiCo's distribution network, in a regulatory filing in March.
In 2008, the company earned $1.85 a share excluding asset write downs, restructuring costs and other special items.
Before it was spun off in May 2008, the company was the American beverage unit of British confectionary manufacturer Cadbury Plc. The company has a broad portfolio include Dr Pepper, Snapple, 7UP, Mott's, A&W, Sunkist Soda, Canada Dry, Hawaiin Punch, Schweppes, and other consumer favourites.
Among its peers, Atlanta, Georgia-based Coca-Cola Co last month saw its first-quarter profit drop to $1.348 billion or $0.58 per share, compared to $1.5 billion or $0.64 per share posted a year earlier. Net operating revenues declined 3 per cent to $7.17 billion from $7.38 billion last year.
Another peer, Purchase, New York-based PepsiCo, Inc. also last month posted a slight decline in first-quarter profit to $1.135 billion from $1.148 billion in the prior-year quarter. However, its earnings per share increased to $0.72 from $0.70 last year. Net revenue decreased to $8.263 billion from the $8.333 billion of the same quarter of a year ago.
Effective 1 January 2009, Pepper Snapple operates under three reporting segments – beverage concentrates, packaged beverages and Latin America Beverage.
Sales of beverage concentrates stood at $243 million for the first quarter rising 9 per cent from $222 million in the comparable quarter a year ago. Adjusted net sales increased 11 per cent on volume growth and price increases.
Net sales for packaged beverages declined 3 per cent to $944 million from $978 million in the year-ago quarter. Adjusted net sales grew 3 per cent on sales volume growth in CSDs, Hawaiian Punch and pricing action across CSDs, Snapple and Mott's.
Latin America Beverages net sales for the first quarter fell 23 per cent from $95 million in the prior –year quarter to $73 million. However, adjusted net sales edged up 1 per cent on sales volume growth.
For fiscal 2009, Dr Pepper Snapple expects earnings to be in the range of $1.85 to $1.93 per share. The company also revised upwards its adjusted earnings forecast to a range of $1.70 to $1.78 per share up from previous estimates of $1.59 and $1.67 per share. According to analysts the company will report earnings of $1.67 per share for fiscal 2009.