Non-alcoholic beverages and soft drinks company Dr Pepper Snapple Group, Inc. (DPS) is scheduled to announce its fourth-quarter results before market opens on Thursday. The results come out in a period of ongoing economic worries and slowing consumer spending, which are tampering beverage makers' sales and volume growth.
Formerly, Dr Pepper was the American beverage unit of British confectionery manufacturer Cadbury plc (CBY, CBRY.L, CDSCF.PK). It was spun off in May 2008 and named Dr Pepper Snapple from Cadbury Schweppes Americas Beverages.
Dr Pepper manufactures, markets and distributes more than 50 brands and several flavors of carbonated soft drinks, juices, teas, mixers, waters and other beverages. The company's portfolio includes Dr Pepper, Snapple, 7UP, Mott's, A&W, Sunkist Soda, Canada Dry, Hawaiian Punch, Schweppes, Peñafiel, Squirt, Clamato, Mr & Mrs T Mixers, Rose's, Yoo-hoo and other consumer favorites.
On average, five analysts polled by Thomson Reuters expect Dr Pepper to earn $0.37 per share in the fourth quarter. Analysts also forecast quarterly revenues of $1.33 billion. For fiscal 2008, the Wall Street analysts have a consensus earnings estimate of $1.82 per share on revenues of $5.73 billion.
While announcing its third-quarter results, Dr Pepper trimmed its fiscal 2008 earnings forecast, citing deteriorating economic conditions in U.S. and Mexico, the impact of a strengthening U.S. dollar and loss of Hansen Natural product distribution. The company is now expecting full-year 2008 reported earnings per share of approximately $1.54 to $1.57, or approximately $1.83 to $1.86 excluding certain items. The company's previous forecast was at least $1.65 per share on a reported basis and at least $1.94 per share on an adjusted basis. The company also expects net sales growth of about 1% for the year.
Larry Young, Dr Pepper Snapple Group's president and chief executive officer said, In these uncertain times, we remain committed to our long-term goals - leverage our strong portfolio of flavor brands, strengthen our route-to-market, rally around our customers and consumers and deliver results that outperform the industry. We continue to invest with an eye to the future and our recent organizational changes will ensure that we are better able to leverage our third-party and company-owned distribution models to drive process simplification, speed of decision making and total system profitability.
For the sequentially preceding third quarter, which was the first full quarter for Dr Pepper as a stand-alone business, the company reported a decline in profit, hurt by higher one-time costs and lower net sales due to the absence of glaceau. The company posted net income of $106 million for the quarter, compared with $154 million recorded in the prior-year quarter. On a per share basis, earnings fell 32% to $0.41 from last year's $0.61 per share.
Dr Pepper's third-quarter net sales decreased 2% to $1.51 billion from $1.54 billion last year, reflecting the absence of glaceau. Excluding glaceau, net sales rose 5% on 1% volume growth and the continuing benefit of pricing actions.
Among peers, Coca-Cola Co. (KO) has reported an 18% decline in its fourth-quarter profit, hurt by higher one-time charges. The beverages giant, which which sells Coke, Minute Maid orange juice, Dasani bottled water, VitaminWater, Nestea and other brands, posted net income of $995 million for the quarter, down from $1.21 billion in the previous year. On a per share basis, earnings declined 17% to $0.43 from last year's $0.52. Coca-Cola's quarterly net operating revenues fell 3% to $7.13 billion from $7.33 billion a year ago.
Another peer, Pepsico, Inc. (PEP) on February 13 reported a decline in its profit for the fourth quarter, hurt by charges, despite an increase in revenues. The Purchase, New York-based company's quarterly earnings dropped to $719 million, or $0.46 per share, from $1.262 billion, or $0.77 per share, last year. The company, which operates through four divisions: Frito-Lay North America, PepsiCo Beverages North America, PepsiCo International and Quaker Foods North America, generated quarterly revenues of $12.729 billion, up from $12.346 billion, in the previous-year quarter.
For fiscal 2009, PepsiCo sees both net revenue and core earnings per share growth in mid-to high-single-digits on a constant currency basis. The company expects that foreign exchange, at current spot rates, would hurt constant-currency core earnings per share by about 8% points. PepsiCo also expects that the first half of 2009, the first quarter in particular, will present the most difficult year-over-year comparisons, partially reflecting commodity costs and foreign exchange rates.
DPS closed Wednesday's trading at $15.51, down $0.05, on a volume of 2.56 million shares. For the 52-week period, the company's trading range was $11.83 - $26.85.
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