Dr Pepper 3Q profit up 43 pct on lower costs

Dr Pepper Snapple Group 3rd-quarter profit rises 42.5 percent as it benefits from lower costs

PLANO, Texas (AP) -- Dr Pepper Snapple Group Inc. said Thursday its third-quarter profit rose 42.5 percent, as the company benefited from lower costs, even while its sales fell.

The company raised the lower end of its full-year guidance for the year, but shares fell as some analysts worried the change means their expectations for the fourth-quarter are too high.

The maker of Dr Pepper and Crush earned $151 million, or 59 cents per share, in the period ended Sept. 30. That compares with earnings of $106 million, or 41 cents per share, a year earlier.

Excluding one-time items such as a tax gain related to separation costs and restructuring items, the company earned 54 cents per share, beating a consensus from Wall Street analysts.

Analysts surveyed by Thomson Reuters had expected 49 cents per share in profit and revenue of $1.44 billion.

Revenue fell 4 percent to $1.43 billion from $1.49 billion. Volume rose 3 percent, while carbonated soft drink volume rose 5 percent. Non-carbonated beverages -- including juices -- were up slightly.

Shares fell $1.25, or 4.5 percent, to $26.57 in late morning trading Thursday.

The company said its flagship Dr Pepper brand had a 3 percent increase in volume, while a grouping of its other four core brands -- 7UP, Sunkist, A&W and Canada Dry -- fell 3 percent. Crush volume more than doubled on expanded distribution.

Snapple volume fell 6 percent, but that was an improvement from prior quarters. Consumers had been switching away from the higher-priced drink amid the recession.

The company said it expects net sales to fall between 3 and 4 percent for the year.

The company, based in Plano, Texas, said it now expects earnings per share to range from $1.92 to $1.96 a share, excluding one-time items, on lower packaging and ingredient costs, productivity investments and other items.

Previously, it had expected earnings per share of $1.88 to $1.96, excluding one-time items.

Analysts, whose estimates typically exclude one-time items, expect earnings per share of $1.97 for the year.

Deutsche Bank-North America analyst Andrew Kieley told clients in a note the new guidance means the company expects earnings per share -- without one-time items -- to be 43 cents in the fourth quarter, which is below analyst predictions of 49 cents and his estimate of 48 cents.

"This could prove conservative, but reflects slow category/consumer trends, and softness of (Dr Pepper Snapple's) premium brands," he wrote.