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Dr Pepper Snapple Group reports 37% jump in EPS for Q1

BY Allison Cerra

PLANO, Texas Dr Pepper Snapple Group reported a 37% increase in earnings per share for its first quarter 2009, the company announced Wednesday.

The company reported first quarter 2009 earnings of $0.52 per share, compared with earnings of $0.38 per share in the prior-year period. Excluding net gains related to the Hansen contract termination settlement and the sale of certain distribution rights in the current year period, as well as restructuring charges in the prior year period, the company earned $0.37 per share compared with $0.40 per share in 2008.

For the first quarter, reported net sales declined 3%. Excluding the loss of Hansen product distribution and on a currency neutral basis, net sales increased 4% on 6% sales volume growth and solid pricing actions. Net sales growth was negatively impacted by a higher mix of carbonated soft drink concentrates and value juices. Segment operating profit, as adjusted, increased 18% reflecting lower commodity and fuel costs, operating benefits from higher volumes and a strong cost control focus. Reported income from operations was $265 million, including $62 million of net pre-tax gains related to certain distribution agreement changes.

“While the U.S. economy remains weak, consumer sentiment appears to be improving and we’re continuing to see a shift in purchase habits toward CSDs and other value offerings,” said Dr Pepper Snapple president and CEO Larry Young. “Our portfolio of CSDs and value juices performed extremely well in the quarter led by strong gains in Crush distribution and Hawaiian Punch and solid Dr Pepper and Core 4 growth. Pressure remains at the premium end of the portfolio, especially with Snapple. We’re confident, however, that recent product and package changes coupled with strong marketing programs will return this brand to growth toward the end of this year.”

Young added, “As we look ahead, we see a North America beverage industry that will be markedly different, yet has the potential to reignite category growth. For DPS, this presents a unique opportunity to build upon our already strong growth prospects. This will require even greater attention to revenue, cost and productivity management and ongoing investments in our brands to ensure we capture our fair share of the growth.”

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Mars announces limited edition candies, marketing campaign

BY Allison Cerra

HACKETTSTOWN, N.J. Mars Snackfood announced Monday the availability of limited-edition M&M’s Strawberried Peanut Butter Chocolate Candies and Snickers Nougabot Bar to celebrate the June 24 release of “Transformers: Revenge of the Fallen” from DreamWorks Pictures and Paramount Pictures, in association with Hasbro, Inc.

Mars also will be rolling out a “Transformers: Revenge of the Fallen”-themed marketing campaign in support of the limited-edition products, including:

  • Action film director Michael Bay is putting his signature touch on a dramatic television commercial in which animated M&M’s brand characters, “Red” and “Yellow,” team up with the popular Autobot Optimus Prime, to deliver the M&M’s Strawberried Peanut Butter Chocolate Candies to stores around the country. The commercial will debut on June 1, 2009.
  • Michael Bay himself will become an M&M’s character for a new “Inner M” print ad that will be featured in June issues of Entertainment Weekly, Us Weekly and USA Weekend. The print advertising is an extension of the brand’s “Inner M” equity campaign which encourages Americans to find their fun side and embrace their “Inner M.”
  • Consumers will be able to join “Red” and “Yellow,” as well as other “Transformers: Revenge of the Fallen” characters on a digital scavenger adventure on www.mms.com, as well as other sites throughout the Web, beginning May 19, 2009.
  • Kyle Busch’s No. 18 M&M’s car in the NASCAR Sprint Cup Series will sport a special “Transformers: Revenge of the Fallen”-themed paint scheme during the June 21, 2009, race at Infineon Raceway, where Busch took the checkered flag last year. The special paint scheme features movie title decals on the hood, trunk and TV panel and the M&M’s brand “Red,” “Green” and “Yellow” characters modified into “Transformers: Revenge of the Fallen” characters.

“This campaign with the iconic M&M’s brand is a great way to build even more excitement about the new installment of the ‘Transformers’ movie franchise with consumers everywhere – from the grocery store, on their computer screens and even at the racetrack,” commented LeeAnne Stables, EVP Worldwide Marketing Partnerships for Paramount Pictures.

The M&M’s Strawberried Peanut Butter Chocolate Candies feature smooth peanut butter and sweet strawberry flavor surrounded by a colorful M&M’s candy shell. The M&M’s Strawberried Peanut Butter Chocolate Candies are offered in singles (1.4 oz) and medium bags (11.4 oz) and retail for $.79 and $3.49, respectively.

 

In addition to M&M’s, Mars’ Snickers brand is launching a limited-edition Snickers Nougabot Bar with yellow nougat and dark caramel to resemble the colorings of one of the  Autobots named Bumblebee. The packaging includes images of the Bumblebee character as well as “Bits & Bytes” “Transformers: Revenge of the Fallen” movie and Snickers candy trivia. The Snickers Nougabot Bar is available nationwide in singles for $.79.

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PepsiCo files suit against PBG and its board

BY Allison Cerra

PURCHASE, N.Y. PepsiCo announced Monday that it has filed suit in Delaware against the Pepsi Bottling Group and its directors.

The suit alleges that the defendants intentionally failed to provide notice of a recent PBG Board meeting to the PBG directors affiliated with PepsiCo. At that meeting, the directors in attendance claim to have adopted a “poison pill,” implemented certain new executive compensation arrangements and purported to amend the PBG bylaws in ways PepsiCo believes are detrimental to its rights as a shareholder. Because of the lack of notice and consideration by the full Board, PepsiCo alleges those actions by the board at the meeting are invalid.

PepsiCo further alleges that PBG and its Board breached their fiduciary duties to PBG shareholders by adopting the poison pill because it restricts PepsiCo’s rights as a PBG shareholder and constitutes an unreasonable and disproportionate response to PepsiCo’s constructive proposal. The suit seeks declaratory and injunctive relief.

On April 19, 2009, PepsiCo made a proposal to acquire all of the outstanding shares of common stock that it does not already own in its two largest anchor bottlers, PBG and PepsiAmericas, at a value of $29.50 per share for PBG and $23.27 per share for PAS. PepsiCo currently owns 33% of the outstanding shares of PBG and 43% of the outstanding shares of PAS.

On May 4, 2009, PBG announced that its Board had rejected PepsiCo’s proposal. In addition, PBG also announced that its Board had approved adoption of a shareholder rights plan, commonly referred to as a “poison pill,” as well as retention arrangements for certain key employees and amendments to PBG’s bylaws regarding notice and informational requirements for shareholder actions.

PepsiCo reiterates its belief that its offers are full and fair and in the best interests of PBG, PAS and their respective shareholders.

For more information about PepsiCo’s proposal with respect to PBG and PAS, please access our website at http://www.transactioninfo.com/pepsico.

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