Dr Pepper Snapple Group, Inc.'s
) fourth-quarter 2013 adjusted earnings of 97 cents per share
beat the Zacks Consensus Estimate of 85 cents by 14.1%. Moreover,
earnings increased 18.3% year over year due to pricing gains,
productivity improvements and a LIFO inventory benefit. However,
sales continued to be soft due to weak volumes.
During the quarter, Dr Pepper's net sales declined 1% year over
year to $1.46 billion owing to lower volumes and unfavorable
trade adjustments. Sales volume declined 4% year over year. Net
sales narrowly missed the Zacks Consensus Estimate of $1.48
billion by 1.4%.
Volumes were hurt by the difficult operating conditions faced by
carbonated soft drinks (CSDs), in North America and a slow
consumer spending environment.
Changing consumer preferences, increasing health consciousness
and rising obesity concerns, possible new taxes on
sugar-sweetened beverages and growing regulatory pressures have
tremendously pressurized the CSD category in North America.
Adjusted operating income increased 10.2% year over year to $323
million during the quarter.
Volumes in Detail
Dr Pepper's sales volume is measured in two ways: 1) sales volume
and 2) bottler case sales (BCS) volume. Sales volume represents
sales of concentrates and finished beverages sold to bottlers,
retailers and distributors. BCS includes the sales of packaged
beverages by the company and its bottlers to retailers and
Sales volume, as discussed earlier, was down 4% in the quarter as
a 4% volume gain in the Latin American segment was offset by a 6%
volume decline in Beverage Concentrates and a 2% dip in Packaged
In the quarter, BCS volume declined 2% as CSDs and non-carbonated
beverages (NCB) volume dipped 2%. Dr Pepper soft drink volume
declined 1% due to CSD category headwinds.
Geographically, volumes declined 2% in the U.S. and Canada but
increased 3% in Mexico and the Caribbean.
Dr Pepper's net sales from Beverage Concentrates went down 3%
(excluding currency impact) year over year to $321 million as
tailwinds from price increases and favorable mix were partially
offset by a 6% volume decline and unfavorable trade adjustments.
Segment operating profit declined 1% (excluding currency impact)
to $218 million owing to net sales decline.
In the Packaged Beverages segment, net sales declined 2% on a
currency neutral basis at $1.03 billion. Mix gains were offset by
a volume decline of 2%. Segment operating profit declined 18%
(excluding currency impact) to $107 million due to volume decline
and charges related to withdrawal of a multi employer pension
Latin America Beverages:
Dr Pepper's net sales from Latin America Beverages increased 9%
on a currency neutral basis to $116 million, driven largely by
mix gains and volume growth of 4%. Segment operating profit
improved 14% (excluding currency) in the quarter to $16 million
as sales growth and productivity gains offset increasing
commodity, manufacturing and other operating costs.
Full Year 2013
For full-year 2013, Dr Pepper's adjusted earnings per share of
$3.20 exceeded the company's expected range of $3.04 to $3.12 and
the Zacks Consensus Estimate of $3.09 by 3.6%. However due to
continued CSD category headwinds, Dr Pepper's 2013 sales of $5.99
billion were flat year over year.
Sales were in line with the company's expectation but much
below its long-term targets. Reported revenues for full year 2013
however missed the Zacks Consensus Estimate of $6.01 billion.
Sales volume declined 3%, higher than the company's expectation
of 2% decline.
COCA-COLA ENTRP (CCE): Free Stock Analysis
DR PEPPER SNAPL (DPS): Free Stock Analysis
MONSTER BEVERAG (MNST): Free Stock Analysis
WHITEWAVE FOODS (WWAV): Free Stock Analysis
To read this article on Zacks.com click here.
For full-year 2014, Dr Pepper expects adjusted earnings per share
in the range of $3.38 to $3.46. The Zacks Consensus Estimate for
2014 stands at $3.27 per share. Owing to the continued CSD
category headwinds, Dr Pepper expects full year 2014 net sales to
remain flat to up 1% year over year.
Dr Pepper carries a Zacks Rank #4 (Sell). However, some
better-ranked beverage stocks include
The WhiteWave Foods Co.
Monster Beverage Corp.
Coca-Cola Enterprises Inc.
).The WhiteWave Foods Company carries a a Zacks Rank #1 (Strong
Buy). Monster Beverage Corporation and Coca-Cola
Enterprises carry a Zacks Rank #2 (Buy).