PLANO, Texas It's sweet to be Dr Pepper Snapple Group, Inc.
The company's adjusted quarterly profit topped analysts' estimates on Thursday, helped by higher-than-expected concentrate sales, which sent shares up 9%.
The soft drink maker also forecast a full-year profit that could top analysts' estimates as its brands, which include 7UP, Dr Pepper and A&W, outperform the overall industry as cash-strapped consumers seek out value-priced drinks. Fourth quarter net sales rose 3%, as sales volume rose 1%.
Segment operating profit increased 4%, reflecting continuing strength in the company’s carbonated soft drinks business.
"Our (carbonated soft drink) case volume contracted only slightly at a time when liquid refreshment beverages declined low single-digits," CEO Larry Young said.
The company also reported that it generated $709 million of cash from operating activities. Since its separation from Cadbury in May 2008, the company has repaid $395 million of principal of its floating rate term loan, covering both its 2008 and 2009 obligations.
DPS's forecasts full-year earnings of $1.59 to $1.67 per share, excluding a one-time gain of 12 cents per share related to the termination of a contract with Hansen Natural Corp, owner of Monster Energy Drinks.
Meanwhile, DPS reported a fourth quarter 2008 loss of $2.44 per share, compared with earnings of $0.54 per share in the year-ago period, which Larry Young noted was caused by the current economic climate and the “weak demand for [our] premium products.”
“In our first year as a public company, and in what is arguably one of the toughest economic environments on record, we are proud of what we have accomplished so far,” Young said. “With the U.S. economy facing its worst recession in postwar times and rising unemployment rates, consumers have dramatically changed the way they shop. Value, quality, product satisfaction and increased at-home usage are key factors in purchasing decisions.”