Dr Pepper Snapple misses Q2 earnings, sales volumes increase by 4 percent

28 Jul 2017 --- Dr Pepper Snapple Group, Inc. has reported second quarter 2017 EPS of US$1.02, which included a US$0.18 per diluted share loss on early extinguishment of debt, compared to US$1.39 in the prior year period. For the quarter, sales volumes increased 4 percent, including the Bai acquisition. Reported net sales increased 6 percent, including the Bai acquisition, which accounted for just over 1 percentage point of net sales growth.

Total Bai brand sales growth contributed just over 2 percentage points of net sales growth. Organic net sales growth was driven by an increase in organic sales volumes and favorable product and package mix, which were partially offset by the termination of the Rockstar distribution agreement. 

DPS President and CEO Larry Young said: “I'm proud of our teams for delivering strong top-line results for the quarter. We remain committed to our priority brand strategy, as demonstrated by our increased marketing investment. We also invested further in activities to deliver increased trial of Bai and are encouraged by the results so far. Our CSD portfolio once again outperformed the category, growing both dollar and volume share in measured markets. Our allied brands continue to contribute strong growth to our business, and we're driving growth and productivity with Rapid Continuous Improvement.”

In CSDs, Dr Pepper increased 2 percent, driven by growth in both regular and diet. Canada Dry grew by 6 percent, and Schweppes grew by 4 percent, both on continued growth in the ginger ale and sparkling water categories. Peñafiel increased 8 percent and Squirt grew 7 percent. 7UP increased 5 percent, growing in both the US and the Caribbean. A&W was flat, and other CSDs declined 1 percent. Fountain foodservice volume was flat in the quarter, as 2 percent growth in Dr Pepper was offset by an account specific limited-time offering a year ago.

Beverage Concentrates
Net sales for Beverage Concentrates increased 4 percent in the quarter on a 2 percent increase in concentrate shipments and concentrate price increases taken earlier in the year. Lower discounts further increased net sales as the result of favorable trade accrual adjustments in the quarter that were partially offset by unfavorable product mix. SOP increased 3 percent driven by net sales growth, which was partially offset by increases in marketing investments due to marketing accrual adjustments.

Packaged Beverages
Net sales for Packaged Beverages increased 6 percent in the quarter on favorable product and package mix, mostly due to growth in NCBs, including continued growth in the company's allied brands, a 4 percent increase in organic sales volume and growth from the Bai acquisition, net of the loss of Rockstar. SOP decreased 6 percent as results of the acquired Bai business, excluding the distribution profits within the company’s distribution system, were a loss of US$10 million, including US$20 million of marketing investments, US$2 million of amortization of intangibles and US$1 million of transaction expenses. 

Latin America Beverages
Net sales of Latin American Beverages increased 11 percent in the quarter on a 6 percent increase in sales volumes and higher pricing, which was partially offset by unfavorable product and package mix. SOP was flat in the quarter, as sales growth was entirely offset by higher commodity costs, unfavorable foreign currency transaction effects, inflationary increases in certain operating expenses and increased planned marketing investments. In the quarter, the segment incurred US$4 million of higher US dollar denominated input costs, which caused a 17 percent decline in SOP.