Dr Pepper Snapple’s profits down as costs rise

By Helen Glaberson

- Last updated on GMT

Related tags: Dr pepper snapple, Revenue

As Dr Pepper Snapple’s profit fell by six per cent, the firm announced a hike in prices to help offset soaring packaging, ingredient and transportation costs.

Last week global drink giants Coca-Cola and PepsiCo also said they would increase prices over the third quarter of the year.

In its second quarter results, Dr Pepper Snapple reported a fall in net income from $183m the year previous to $172m, for the three months ending June 30.

CEO Larry Young, in a conference call on the results, said the company had previously anticipated that​Q2 would be the firm’s most challenging quarter of the year.

“Compounding an already very tough volume comparison, double-digit COGS inflation and incremental pricing actions, April was weaker than expected, and the consumer continued to reflect uncertainty,”​ he said.

However, revenue rose four per cent to $1.58bn from $1.52bn aided by growing demand for the company’s Canada Dry and Snapple brands.

Sales hike

The firm said it expected packaging and ingredient input costs to increase its outgoings by 7 to 9 per cent on a constant volume mix basis.

According to Jefferies analyst Jeff Farmer, the sales volume for the firm’s beverage concentrate fell by two per cent in the quarter, a steeper drop than the 0.3 per cent decline analysts expected, said Reuters.

Farmer said the decline was not surprising, considering the weak North American performance that Coca-Cola and PepsiCo reported last week.

The company said it continues to expect full year reported net sales to increase three per cent to five per cent and diluted earnings per share to be in the $2.70 to $2.78 range.

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