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Dr Pepper Snapple Q1 Profit Declines On Higher Costs; Backs Outlook

Dr Pepper Snapple Group Inc. (DPS) on Wednesday reported an 11 percent decline in profit for the first quarter, as higher packaging and ingredient costs as well as flat sales volume offset an increase in revenues.

Core earnings per share declined and missed analysts' estimates. However, the soft-drink maker reiterated its outlook for full-year earnings and sales.

The Plano, Texas-based company's sales of packaged beverages in the quarter rose 3 percent from last year on favorable mix and pricing that was partly offset by the of certain customer transportation allowances previously recorded in selling, general and administrative expenses.

Net sales of beverage concentrates were flat as higher pricing was offset by a 3 percent volume decline and higher discounts. Latin America beverages net sales rose 6 percent.

The maker of 7UP, Mott's, Snapple and Canada Dry said its reported segment operating profit for the quarter declined 4 percent.

The result reflected the benefits of higher sales and productivity improvements that were more than offset by higher packaging and ingredient costs, other operating cost increases, and higher marketing investments of $8 million.

Total bottler case sales volume for the quarter was flat with the year-ago period, with carbonated soft drinks growing 2 percent and non-carbonated beverages declining 7 percent. Volume was flat in the U.S. and Canada, while it grew 4 percent in Mexico and the Caribbean.

Dr Pepper Snapple's first-quarter net income declined to $102 million or $0.48 per share from $114 million or $0.50 per share in the year-ago period.

Excluding $0.02 per share of unrealized commodity mark-to-market gains, core earnings per share were $0.46, down from $0.50 in the prior-year period.

On average, thirteen analysts polled by Thomson Reuters expected the company to earn $0.48 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 2 percent to $1.36 billion from $1.33 billion in the prior-year quarter. Analysts had a consensus revenue estimate of $1.36 billion.

Looking ahead to fiscal 2012, Dr. Pepper Snapple continues to expect reported net sales growth near the low end of its long-term 3 percent to 5 percent range, and core earnings per share in a range of $2.90 to $2.98.

Analysts expect the company to earn $2.93 per share for the year on revenues of $6.06 billion.

In Wednesday's session, DPS is trading at $38.88, down $1.44 or 3.57 percent on a volume of 224,074 shares.

by RTT Staff Writer

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