Expect to Pay More For Your Dr Pepper

Dr Pepper Snapple's second-quarter profit fell 6 percent as the beverage maker faced higher costs and said it would be raising prices.

Dr Pepper Snapple Group Inc. said Wednesday that it is dealing with increased packaging, ingredient and transportation costs. Like many companies, the soft drink maker is hoping that boosting prices will alleviate some of the pressure. But businesses are still trying to figure out just how much customers are willing to absorb.

The company anticipates packaging and ingredient costs will increase cost of goods sold by 7 percent to 9 percent on a constant volume/mix basis this year. Transportation costs are expected to raise 2011 selling, general and administrative expenses by about $35 million.

Its stock fell 97 cents, or 2.5 percent, to $38.67 in morning trading. Over the past year, the shares have traded in a range of $33.60 to $43.13.

Dr Pepper Snapple reported net income of $172 million, or 77 cents per share, for the three months ended June 30, down from $183 million, or 74 cents per share, a year ago.

Earnings per share rose because there were fewer shares outstanding during the current quarter.

Analysts polled by FactSet forecast earnings of 76 cents per share.

Revenue rose 4 percent to $1.58 billion from $1.52 billion on growing demand for beverages such as Canada Dry and Snapple. Aside from its namesake brands, Dr Pepper Snapple's products include Sunkist soda, Clamato and 7Up.

Wall Street expected revenue of $1.6 billion.

The Plano company reported double-digit volume growth for Canada Dry, while Snapple volume increased 8 percent. Dr Pepper volume fell 2 percent as the year-ago period was highly promotional. Mott's volume dropped 10 percent on double-digit price increases.

Dr Pepper Snapple maintained its full-year earnings guidance of $2.70 to $2.78 per share. It still expects revenue to climb 3 percent to 5 percent.

Analysts predict earnings of $2.75 per share on revenue of $5.92 billion.

Copyright AP - Associated Press
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