US – Keurig Dr Pepper (KDP) has reported strong results for the third quarter that ended September 30, 2022, with net sales growth of 11.4% year-on-year to US$3.62 billion, driven by a favorable net price realization of 12.1%.
All four segments of the American beverage and coffeemaker conglomerate grew sales during the quarter, however, there was only a slightly offset by lower volume/mix of 0.3%, reflecting the strength of the portfolio and continued strong in-market execution.
Gross profit increased by 3.6% to US$1.9 billion, with the margin at 52.5% while the operating margin was 10.8%, and operating income for the quarter declined by 50.4% to US$394 million.
The soft drinks giant’s Q3 GAAP operating income decreased 50.4% to $394 million, primarily reflecting a US$311 million non-cash impairment charge on the Bai brand.
CEO Ozan Dokmecioglu stated, “The third quarter was another strong one for KDP, as we again demonstrated the advantages of our all-weather business model, which has proven adept at performing well in an evolving macro environment to meet the needs of consumers.
While the macro landscape remains challenging, our cold beverages portfolio continues to perform exceptionally well, with strong in-market execution and increased marketing investment driving consistent growth in LRB market share.”
KDP’s beverage concentrates net sales increased 17.1% to US$459 million, compared to US$392 million in the year-ago period and, on a constant currency basis, advanced 17.3%.
According to the company, this strong and balanced net sales performance was driven by a higher net price realization of 16.6% and a favorable volume/mix of 0.7%, reflecting the ongoing strength of the portfolio.
Net sales for Latin America Beverages increased 26.9% to US$198 million, on a constant currency basis, advancing 28.8% driven by higher net price realization of 17.3% and increased volume/mix of 11.5%, reflecting the strength of the portfolio and continued strong in-market execution.
In coffee, retail consumption of single-serve pods manufactured by Keurig Dr Pepper in Iri-tracked channels increased by 4%, while its dollar market share remained at 82%. The company said it registered stronger growth in untracked channels.
Dokmecioglu noted that the coffee business has steadily recovered from the significant supply chain disruption earlier this year and is poised to deliver strong sales and earnings growth in the fourth quarter.
Meanwhile, KDP’s Coffee Systems registered a jump of 4.7% to US$1.21 billion an advancement of 5.2% on a constant currency basis on the back of a 7.8% increase in net price realization, partially offset by a 2.6% decrease in volume/mix.
Packaged Beverages, also the largest segment for KDP after the Coffee system, bagged net sales of US$1.76 billion, a rise of 13.5% with volume/mix even.
With such a strong quarter, Keurig Dr Pepper has reaffirmed its full-year guidance for constant currency net sales growth in the low-double-digit range and Adjusted EPS growth in the mid-single-digit range.
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