US beverage major Dr Pepper Snapple Group declares Q4 loss; shares rise on positive forecast
27 Mar 2009
American beverage company Dr Pepper Snapple Group has reported a fourth-quarter loss for the 2008 fiscal year, with the company citing deterioration in the financial markets, and an after-tax impairment charge of $696 million tied to goodwill and intangible assets, the company said in a press statement.
Plano, Texas-based Dr Pepper Snapple Group, spun off from Cadbury Plc last year, posted a net loss of $621 million in the fourth quarter, or $2.44 per share, down from a profit of $138 million, or 54 cents per share, during the same quarter a year earlier. The beverage company posted net fourth-quarter sales of $1.38 billion, down 1 per cent from $1.39 billion.
In the fourth quarter, the recession led to lower demand for more-expensive beverages, such as Snapple, and ''slightly'' lower shipments of carbonated soft drinks, CEO Larry Young said in a statement. The company had a loss in the period as it wrote down the value of its assets. ''With the US economy facing its worst recession in postwar times and rising unemployment rates, consumers have dramatically changed the way they shop," he said.
That has driven down demand for the company's higher-end products like Snapple while driving sales of value-priced offerings, Young commented. "Value, quality, product satisfaction and increased at-home usage are key factors in purchasing decisions. For the quarter, our carbonated soft-drink volume contracted only slightly at a time when liquid-refreshment beverages declined low single digits."
The company said ''excluding the impact of Glaceau and Hansen US product distribution losses, net sales increased 3 per cent reflecting a 1 per cent increase in sales volume and the ongoing benefit of pricing actions taken earlier in the year.''
The company lost its distribution contract for Hansen Natural Corp.'s Monster Energy to Coca-Cola Co. in November. Energy drinks have been a growth category for beverage companies as people drink less soda and consumer spending slows.
For fiscal 2008, Dr Pepper Snapple Group reported a net loss of $312 million, or a loss of $1.23 per share, down from a profit of $497 million, or $1.96 per share, a year earlier. Meanwhile revenue for the year hit $5.71 billion, up from $5.695 billion a year earlier.
Consequently, shares of the company jumped as much as 9.6 per cent on the New York Stock Exchange after the high end of its 2009 forecast exceeded some analysts' estimates. Earnings will be $1.59 to $1.67 a share this year, excluding a pretax gain of 12 cents related to a canceled distribution contract, Dr Pepper Snapple Group said. This was in contrast to the analysts' average of $1.61.
