UPDATE 4-Dr Pepper trims sales view as consumers stay frugal
* Q3 adj EPS 54 cents tops Street view of 49 cents
* Sales slip 4 pct, slightly short of Street estimate
* Raises lower end of '09 adj EPS view to $1.92-$1.96
* Trims adj '09 sales view to a 2 pct increase
* Shares down 4 percent (Adds comments from conference call)
NEW YORK, Nov 5 (Reuters) - Dr Pepper Snapple Group Inc (DPS.N) trimmed its 2009 sales view on Thursday and said consumers were still frugal with soft drink purchases, sending its shares down 4 percent.
The maker of Dr Pepper, Sunkist and 7UP beverages raised the low end of its full-year earnings forecast as easing commodity costs boost profit margins.
Stifel Nicolaus analyst Mark Swartzberg said the new forecast implied an outlook for the current fourth quarter that is below analysts' estimates.
Dr Pepper Snapple also posted quarterly sales that missed Wall Street forecasts, saying beverage sales remain pressured in the weak economy.
"The consumer is definitely looking for value out there. We've got to watch the consumer," Chief Executive Larry Young said on a conference call with analysts. "We thought it would be stronger in the fourth quarter. It's still a little weak."
Dr Pepper's results echo those of larger rivals Coca-Cola Co (KO.N) and PepsiCo Inc (PEP.N). Both companies posted disappointing sales results and cautioned that consumer spending would remain constrained. [ID:nN20380392]
Swartzberg said a bounce in consumer interest in alcoholic and nonalcoholic drinks had not materialized as clearly as was expected earlier in the year. In response, beverage makers are spending more to defend market share and restore growth.
"We think this spells lackluster trading for many beverage names over the next few months, as estimates are adjusted and peak season 2010 is still a relatively distant consideration," he said in a research note.
For its lower sales outlook, Dr Pepper blamed more pronounced declines in sales of Sunkist sodas, among other things. It said it has been spending more on promotions and coupons, but that this spending is not generating as big a lift to sales as normally expected.
The company also said it noticed that sales were much stronger in the first half of the month, reflecting the timing of pay checks or unemployment benefits.
HIGHER VOLUME, LOWER PRICES
Dr Pepper reported net income of $151 million, or 59 cents per share in the third quarter, up from $106 million, or 41 cents per share, a year earlier.
Excluding one-time items, it earned 54 cents per share. On that basis, analysts on average were expecting 49 cents, according to Thomson Reuters I/B/E/S.
Net sales fell 4 percent to $1.43 billion. Excluding the impact of currency fluctuations and the loss of Hansen Natural Corp (HANS.O) drinks it no longer distributes, sales rose 2 percent. Analysts were expecting $1.44 billion.
The company said price increases taken earlier this year and a 4 percent increase in sales volume were offset by selling a larger proportion of lower-priced carbonated soft drinks and value-priced juices.
Volume of carbonated soft drinks rose 3 percent, driven by expanded distribution of Crush drinks. Volume of the company's core soft-drink brands -- 7UP, Sunkist, A&W and Canada Dry -- fell 3 percent.
The company's higher-end noncarbonated beverages continued to feel pressure, with Snapple volume down 6 percent, after falling 15 percent in the second quarter and 22 percent in the first quarter.
Dr Pepper Snapple said it expects 2009 earnings of $1.92 to $1.96 per share excluding one-time items, on sales growth of about 2 percent, excluding the Hansen Natural drinks.
Swartzberg said the new forecast implied fourth-quarter earnings of 43 cents per share. Analysts on average were expecting 48 cents, according to Thomson Reuters I/B/E/S.
Its prior 2009 profit forecast was $1.88 to $1.96 per share on adjusted net sales growth of 2 percent to 4 percent.
Dr Pepper shares were down $1.14 at $26.68 in afternoon trading on the New York Stock Exchange. (Reporting by Martinne Geller; editing by John Wallace, Maureen Bavdek and Andre Grenon)
