(Adds information on the company's outlook and updated stock price.)
DOW JONES NEWSWIRES
Dr Pepper Snapple Group Inc.'s (DPS) third-quarter earnings rose 42% amid increased volume and lower packaging and ingredient costs.
But the company said that tepid consumer spending continues to weigh on sales of its more expensive brands like Snapple. The stock was recently down 4.1% to $26.68. Earnings beat analysts' expectations and the drinks company boosted the low end of its 2009 profit outlook while seeing revenue declining toward the worst end of its view.
International growth has bolstered larger rivals Coca-Cola Co. (KO) and Pepsi Co Inc. (PEP) while U.S. soda sales have remained sluggish for some time, with the recession adding to the pressure. Dr Pepper Snapple, which derives most of its sales from the U.S., has aimed to expand the portfolio of beverages it owns or distributes and earlier this year expected product and packaging changes will help its higher-end Snapple brand resume growth toward year-end.
The maker of Snapple teas, Mott's apple juice and Dr Pepper soda reported a profit of $151 million, or 59 cents a share, up from $106 million, or 41 cents a share, a year earlier. Excluding items such as restructuring-related costs and expenses related to it spinoff from Cadbury PLC (CBY), earnings rose to 54 cents from 45 cents.
Net sales decreased 4% to $1.43 billion but rose 2% excluding foreign-exchange impacts and the loss of Hansen Natural Corp. (HANS) product distribution. Volume rose 4%.
Analysts polled by Thomson Reuters had forecast earnings of 49 cents on revenue of $1.44 billion.
President and Chief Executive Larry Young said, "While the economy is showing some signs of recovery, it's still too early to see this translate into higher beverage sales."
Soda volume was up 4% from a year earlier and flat sequentially. On the premium end, Snapple sales fell 6%, but improved sequentially for the second straight quarter.
Excluding gains related to distribution agreement changes and other items, the company expects 2009 earnings per share to be in the range of $1.92 to $1.96. Excluding the loss of Hansen's product distribution and on a currency neutral basis, the company expects sales to grow 2% in 2009.
Stifel Nicolaus analyst Mark Swartzberg noted that the company's guidance implies that Wall Street's expectations for the fourth quarter may be too high.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com
(Anjali Cordeiro contributed to this report.)