Dr Pepper Snapple Group's first-quarter net income tumbled nearly 33 percent, hurt by a one-time charge and weak sales, but adjusted results beat estimates and the company raised its earnings per share outlook for the year. Its shares rose 5 percent.
Shoppers have been spending less on soft drinks as they struggle in the weak economy. They're also switching to healthier juices and teas.
The maker of Crush and Dr Pepper soft drinks said Thursday it earned $89 million, or 35 cents a share in the first three months of the year, down from $132 million, or 52 cents a share, a year earlier.
Excluding a charge for separation-related foreign deferred tax, the company earned 40 cents a share.
Analysts expected earnings per share of 38 cents, according to Thomson Reuters. Analysts typically exclude one-time items from their estimates.
Net revenue edged down to $1.25 billion from $1.26 billion last year. Analysts expected revenue of $1.28 billion.
Total sales volume fell 3 percent, which the company said that was due to a drop in contract manufacturing, comparisons to last year's Crush launch and third-party bottler concentrate buy-ins late last year.
Dr Pepper volume increased 3 percent, while volume for core brands 7Up, Sunkist, A&W and Canada Dry was down 2 percent. Crush grew 22 percent as distribution expanded. Fountain foodservice volume rose 2 percent.
Snapple — a premium-priced juice that has been struggling — grew 17 percent.
Overall, packaged beverages net sales fell 2 percent. Volume growth for Snapple, Mott's and Hawaiian Punch was offset by a drop in soft drinks in the mid single-digits.
Latin American beverage net sales fell 1 percent. Volume grew 8 percent but the company said mix — the types of products people buy — hurt sales, as did higher marketplace spending and other factors.
President and CEO Larry Young said the company, based in Plano, Texas, is starting to see some improvements in shopper trends, including better trends with fountain foodservice business. Shoppers had been pulling back on their trips to restaurants amid the weak economy, so that hurt the company's fountain business in restaurants.
The company announced it has completed its licensing agreements for certain brands with PepsiCo Inc., following the beverage company's buyouts of Pepsi Bottling Group Inc. and PepsiAmericas Inc. It received a one-time cash payment of $900 million, which it recorded as deferred revenue. The company said the money will be recognized as net sales over 25 years. In the quarter, it recognized $3 million.
The company maintained its guidance of net sales rising 3 percent to 5 percent for the year. It expects earnings per share will range from $2.29 to $2.37. That's up from prior guidance of $2.27 to $2.35. Without one-time charges, it expects earnings per share to range from $2.34 to $2.41. Analysts expect earnings per share of $2.36 for the year, according to Thomson.
Shares rose $1.71, or 5.1 percent, to $35.70 in afternoon trading Thursday.
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