US: Dr Pepper Snapple swings to FY loss on charges

By | 26 March 2009

Dr Pepper Snapple has reported a net loss of US$312m for 2008, damaged by write-down charges relating to a weakening performance in its fourth quarter.

Dr Pepper Snapple (DPS) said today (26 March) that it swung to a net loss for the 12 months of 2008, compared to a net profit of $497m in the previous year. Net sales for 2008 rose by 3% to $5.7bn, while volumes crept up by 1%.

The group, which is the third largest soft drinks firm in the US, blamed the net loss on an after-tax impairment charge of $696m in the fourth quarter.

It said that the charge related to loss of goodwill and value on intangible assets, largely due to weakening economic conditions in the US during the final months of 2008.

DPS president and CEO Larry Young said: "With the US economy facing its worst recession in postwar times and rising unemployment rates, consumers have dramatically changed the way they shop."

He added: "With our portfolio of leading flavored CSDs and value-priced juices, we continue to offer consumers affordable treats every day. For the [fourth] quarter, our CSD case volume contracted only slightly at a time when liquid refreshment beverages declined low single-digits. Weak demand for our premium products, especially Snapple, continued during the fourth quarter and in to 2009."

DPS predicted that net sales would fall by between 2% and 4% in 2009, largely as a result of losing a distribution contract with California drinks group Hansen Natural, which owns the Monster Energy drinks brand.

"The company remains committed to using its free cash flow to pay down debt and expects to reduce its debt obligations by at least $400 million, prepaying all of 2010 and part of 2011 principal," the firm said.

Young added: "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."

 

Sectors: Soft drinks

Companies: Dr Pepper, CSDs

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