Dr. Pepper Snapple Group moves to 4th-quarter profit; year-ago dragged down by charges

Dr. Pepper Snapple Group returns to 4Q profit

PLANO, Texas — The Dr. Pepper Snapple Group moved to a fourth-quarter profit and company shares soared because of a potential payout from another deal in the softdrink industry also announced Thursday.

Coca-Cola Enterprises Inc. said it was buying the operations of its biggest bottler in North America.

That could mean big money for Dr. Pepper because of payouts from both Coca-Cola, and PesiCo Inc., which recently announced a similar deal. Dr. Pepper could get millions from each company from licensing some of its brands to them.

Dr. Pepper shares jumped 9 percent, or $2.57, to $31.22.

Dr. Pepper Snapple earned $114 million, or 44 cents per share, for the three months ended Dec. 31. That compares with a loss of $621 million, or $2.44 per share, a year ago.

The prior-year period’s results included $2.83 per share for separation-related costs, restructuring items and impairment charges.

Analysts polled by Thomson Reuters forecast a slightly smaller profit of 43 cents per share. These estimates generally remove one-time items.

Sales dipped 1 percent to $1.36 billion from $1.38 billion as packaged beverage sales declined from contract losses. Sales for the Latin America beverages segment rose 10 percent on expanded routes.

The quarterly performance missed Wall Street’s estimate of $1.4 billion.

Carbonated soft drink volume for core brands 7Up, Sunkist, A&W and Canada Dry was up 3 percent, while Crush volume more than doubled on expanded third-party distribution in the U.S. and the launch of some value-oriented offerings Mexico.

President and CEO Larry Young said in a statement that the company, which went public in May 2008, plans to continue to invest in its brands so it can get its products into the hands of more people.

For the year, Dr. Pepper Snapple reported a profit of $555 million, or $2.17 per share. It posted a loss of $312 million, or $1.23 per share, in the prior year.

Full-year sales declined 3 percent to $5.53 billion from $5.71 billion.

Dr. Pepper Snapple predicts a full-year profit between $2.27 to $2.35 per share, while analysts expect earnings of $2.41 per share. The company anticipates sales growth of 3 percent to 5 percent. Based on 2009’s $5.53 billion in revenue, this implies sales of $5.7 billion to $5.8 billion for 2010.

Dr. Pepper Snapple said its licensing of certain brands to PepsiCo Inc., following the beverage company’s buyouts of The Pepsi Bottling Group Inc. and PepsiAmericas Inc., will likely close by the end of the month. It expects a one-time $900 million cash payment related to the agreement. Dr. Pepper Snapple said it plans to use some of the proceeds to lower its debt to $2.55 billion.

The new licensing deals with PepsiCo have an initial 20-year term, with 20-year renewal periods. Dr. Pepper Snapple will start selling some of its owned and licensed brands, such as Sunkist soda, Squirt, Vernors and Hawaiian Punch, in some areas of the U.S. where it has a manufacturing and distribution presence shortly after the deals close.

The company also approved the buyback of an additional $800 million shares of its outstanding stock, which puts the total amount it’s allowed to repurchase at $1 billion.