Dr Pepper Snapple Q3 Profit Tops View, But Revenues Miss; Backs FY13 Profit View

(RTTNews) - Dr Pepper Snapple Group, Inc. (DPS) reported that its third-quarter net income increased to $207 million or $1.01 per share, from $179 million or $0.84 per share in the same quarter last year.

Excluding unrealized commodity mark-to-market gains in both years and certain items affecting comparability in the current year, Core earnings per share were $0.88 compared to $0.79 in the prior year period. Analysts polled by Thomson Reuters expected the company to report earnings of $0.83 per share for the quarter. Analysts' estimates typically exclude special items.

Reported segment operating profit or SOP increased 5%, or $18 million, due to a year-over-year LIFO benefit of $14 million, ongoing productivity improvements, a favorable adjustment to a previously disclosed legal provision and lower people costs primarily driven by favorable costs associated with our insurance programs. These benefits were partially offset by commodity cost increases, principally sweeteners.

Reported income from operations for the quarter was $300 million, including a $1 million unrealized commodity mark-to-market gain. Reported income from operations was $308 million in the prior year period, including $18 million of unrealized commodity mark-to-market gains.

For the quarter, reported net sales increased 1% reflecting 3 percentage points of positive mix and pricing, partially offset by a 1% sales volume decline and higher discounts.

Net sales for Beverage Concentrates increased 2% as concentrate price increases taken earlier in the year and favorable mix were partially offset by a 2% volume decline. SOP increased 2% as net sales growth was partially offset by increased marketing investments of $3 million.

Net sales for Packaged Beverages were flat as a 2% decline in sales volumes was offset by favorable mix and pricing.

Net sales for the quarter were $1.543 billion compared to $1.528 billion in the prior year quarter. Eleven analysts had consensus revenue estimate of $1.56 billion for the quarter.

DPS President and CEO Larry Young said, "We've continued to invest in our brands for their long-term success, and I'm encouraged at this early date with the performance of our Core 4 TEN platform as research tells us that it is bringing consumers back to the category....With our portfolio of consumer-loved brands, our strong execution focus and our continuous improvement mindset, I am confident we can deliver our profit goals for 2013."

The company reaffirmed its full year 2013 core earnings per share guidance in a range of $3.04 to $3.12 range. The company now expects full year reported net sales to be about flat. The company said in July that expected full year reported net sales growth of about 2%. Analysts expect the company to report earnings of $3.07 per share and revenues of $6.07 billion for 2013.