February 13, 2013 / 2:16 PM / in 5 years

UPDATE 3-Dr Pepper forecasts profit below estimates; shares fall 7 pct

* Fourth-quarter earnings/share $0.82 vs est $0.85

* Revenue $1.48 bln vs est $1.49 bln

* Expects 2013 earnings/share between $3.04 and $3.12

* Sees revenue growth of 3 pct

* Shares fall as much as 7 pct (Adds analyst comment, comments from conference call, updates share move)

By Maria Ajit Thomas

Feb 13 (Reuters) - Dr Pepper Snapple Group Inc forecast profit for the current year below analysts’ estimates as the soft drink maker expects raw material costs to continue to constrain earnings.

Shares of the company, whose brands include 7UP, Sunkist and Hawaiian Punch, were down 6 percent at $42.51 on the New York Stock Exchange on Wednesday afternoon.

On a conference call with analysts, Dr Pepper executives said they expected packaging and ingredients to increase the total cost of goods by about 2 percent in 2013.

Almost half of this increase is due to the higher cost of apples, while the remainder is primarily PET used for bottles, corn for sweeteners and paper board for packaging, Chief Financial Officer Marty Ellen said.

“(The weak forecast is) not particularly surprising given the difficult operating environment for North American beverages,” J.P. Morgan Securities analysts wrote in a note to clients.

Coca-Cola Co, the world’s largest soft drink maker, on Tuesday reported lower-than-expected growth in worldwide sales volumes and softness in the United States due to the slow economic recovery.

“Dr Pepper’s results were pretty lackluster and the outlook didn’t give investors much to get excited about,” said Sanford C. Bernstein analyst Steve Powers.

Powers also said Dr Pepper’s selling, general and administrative expenses (SG&A) were a lot higher than expected.

“Their guidance seems to imply further SG&A inflation,” Powers added.

The company expects full-year profit of $3.04 to $3.12 per share and sales growth of about 3 percent, implying revenue of about $6.17 billion.

Analysts were looking for a profit of $3.20 per share on revenue of $6.17 billion.


Dr Pepper reported fourth-quarter SG&A expenses of $555 million for the quarter ended Dec. 31, up from $553 million a year earlier.

The company said total volumes declined 1 percent, with beverage concentrates declining the most.

Profit rose to $170 million, or 81 cents per share, from $166 million, or 77 cents per share, a year earlier.

On an adjusted basis, Dr Pepper earned 82 cents per share, below the average analyst estimate of 85 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 2 percent to $1.48 billion, slightly below market estimates of $1.49 billion. (Reporting By Maria Ajit Thomas in Bangalore, Editing by Saumyadeb Chakrabarty, Maju Samuel)

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