Keurig Dr Pepper meets targets thanks to rise in net sales

Keurig Dr Pepper has reported that both of its Dr Pepper Snapple (DPS) and Keurig Green Mountain (KGM) businesses have recorded net sales rises in the second quarter of the year, in the first earnings report released by the company since KGM acquired DPS earlier this year.

The results of both businesses were reported separately, though Keurig Dr Pepper announced that it will start reporting the performances of both KGM and DPS as a combined result beginning in the third quarter of the year.

DPS’s net sales rose 5% year-on-year to $1.89 billion thanks to the growth of its Canada Dry, Bai and Mott’s Juices brands, as well as the strong performance of its Allied Brands unit.

Meanwhile, KGM’s net sales rose 0.1% to $949 million, which the company attributed to increased sales of coffee pods in the US, thanks to the increasing popularity of single-serve coffee machines such as the K-Elite and the K-Café.

KGM’s operating income increased 10.8% to $288 million, thanks to “significant productivity savings” and the effective management of selling, general and administrative expenses.

However, DPS’s operating income fell 3.5% to $362 million, with the company blaming commodity inflation in plastics, aluminium and apples, higher logistics costs, increased marketing investments and higher administrative expenses, primarily behind the Packaged Beverage DSD organisation.

Commenting on the announcement, Keurig Dr Pepper CEO Bob Gamgort said: “With the merger of these two great companies now behind us, our focus is on integration, optimisation and ensuring delivery of the financial expectations we established.

“We are very pleased with the progress to date. The integration, in particular, is well on track, as evidenced by the establishment of the new KDP leadership team, and we remain very confident in our promised synergies and the future of our new company.

“On financials, the second quarter results reported today are fully consistent with our full-year outlook for 2018, and we are equally confident in the longer-term value creation framework we shared at our March 20, 2018 Investor Day.”