Dr Pepper Raises Full-Year Guidance as Water Sales Continue to Climb

Dr Pepper Snapple Group Inc. lifted its earnings outlook for the year after topping second-quarter expectations, thanks to continued demand for bottled water.

The Plano, Texas-based drink company has been logging solid sales growth across its portfolio of noncarbonated drinks, including Mott's apple juice, Fiji and Aguafiel bottled water and tomato-and-seafood juice Clamato. Despite changing consumer tastes away from food and beverage options that are perceived as unnatural and processed, Dr Pepper has at the same time managed to lift soda volume while larger rivals such as Coca-Cola Co. are struggling to do so.

In its latest quarter, Dr Pepper said noncarbonated beverage volume increased 2%, driven by a 25% jump in its water category and another double-digit climb in Clamato sales volume. The gains follow a 22% rise in first-quarter water sales and a 10% increase in Clamato during the first three months. Carbonated drink volume, meanwhile, inched up 1% as Schweppes sparkling water rose 9%.

Mexico and the Caribbean continued to be bright spots, with volume rising 6% across those regions and offsetting flat volume in the U.S. and Canada. As a result of its international exposure, which is much less than its bigger rivals, unfavorable exchange rates knocked 2% off second-quarter sales, the same hit reported in the first quarter.

Over all for the period, Dr Pepper earned $260 million, or $1.39 a share, up from $220 million, or $1.14 a share, a year earlier. Excluding certain items, profit per share rose to $1.25 from $1.13.

Revenue edged up 2.4% to $1.7 billion.

Analysts projected $1.20 in per-share profit on $1.68 billion in sales, according to Thomson Reuters.

For the year, Dr Pepper expects to post $4.27 to $4.35 in adjusted earnings per share, up from earlier guidance of $4.20 to $4.30 a share. Analysts have been looking for $4.35 in full-year profit per share. The company still anticipates a 2% rise in sales this year.

Shares in the company, up 25% over the past 12 months, were inactive premarket.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

July 27, 2016 08:35 ET (12:35 GMT)

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