US: Dr Pepper Snapple lowers guidance on Q3 decline
Dr Pepper Snapple has become the latest soft drinks firm to report trouble on the US market, with a decline in third quarter revenue, volumes and earnings.
The loss of a distribution contract for Glaceau products was to blame for a 2% drop in revenue, to US$1.5bn, for the three months ended 30 September, Dr Pepper Snapple said today (13 November). Net profit fell to $106m, compared to $154m in the same period last year.
Revenue grew by 5%, excluding the Glaceau loss, said the group (DPS), which was spun off by Cadbury Schweppes in May this year.
Volumes fell 1% during the quarter, down 3% for the first nine months of the year, in what will be seen as more evidence that the North American soft drinks market is struggling to cope with the economic downturn.
President and CEO Larry Young said: "Without a doubt, this is one of the toughest environments the beverage industry has faced in many years. With disposable incomes falling, consumers are thinking harder about what they buy."
DPS lowered its full-year sales guidance to 1% growth, down from an earlier range of 3-5%. Revenue for the first nine months of 2008 crept up to $4.37bn, from $4.35bn in 2007.
It also lowered earnings per share guidance to a range of approximately $1.54-$1.57, down from a minimum of $1.65 previously expected. Net income for the first nine months of 2008 fell to $309m, compared to $359m last year.
Young said that carbonated soft drinks volumes were up 0.5% for the third quarter, but added: "demand for our premium-priced products slowed significantly resulting in performance that was below our expectations." The 7UP brand reported a 3% volume decline.
Hawaiian Punch led the line for non-carbonates, increasing volumes by 24%, compared to a 20% decline for Aquafiel in Mexico and a 7% fall for Snapple.
The group said it would offer more guidance on 2009 in its full-year results statement.
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