• H1 net profits up by 5% to US$286m
  • Operating profits slip by 1% to $492m
  • Net sales rise by 5% to $2.91bn
  • Soft drinks group warns it will have to raise prices to cover higher costs
Dr Pepper Snapple Group under pressure from rising costs

Dr Pepper Snapple Group under pressure from rising costs

Dr Pepper Snapple Group has reported rises in net sales and profits for its fiscal half-year, but warned that it needs to raise prices to offset higher costs.

Both sales and profits rose by 5% for the six months to the end of June, to US$2.91bn and $286m respectively, despite a 1% dip in operating profits, to $492m.

Although Dr Pepper Snapple reaffirmed its full-year guidance, the spectre of rising costs is looming larger on the horizon. With soft drinks volumes flat for the half-year, and second-quarter declines for Dr Pepper, Sunkist, Mott's and 7UP, the group has become increasingly reliant on price increases.

Higher transport, packaging and ingredient costs blighted profitability in the second quarter, with operating profits for the three months down by 4% on the same period of last year and net profits down by 6%, to $172m.

"To cover higher input costs, we are raising prices and driving incremental productivity through our developing Rapid Continuous Improvement capabilities," said group CEO Larry Young.

Sales momentum is unlikely to get much better in the second-half. Dr Pepper Snapple's first-half is already at the top end of its full-year guidance range for net sales growth, which it today reaffirmed as between 3% and 5%.

Still, the company also reiterated its full-year earnings per share guidance range, of $2.7 to £2.78.

In the second quarter, net sales rose by 4% to $1.58bn.

For the full announcement, click here.