Keurig Dr Pepper beat Wall Street estimates for third-quarter profit and sales on Tuesday, helped by steady demand for its higher-priced energy and carbonated soft drinks in the U.S. The beverage maker has been able to maintain its quarterly sales momentum while stepping up investment behind costlier brands, including Dr Pepper Zero Sugar, Bloom Pop prebiotic soda and Ghost energy drinks. “Our refreshment beverages portfolio maintained its double-digit sales growth momentum and we drove solid results in coffee, led by strong JDE Peet’s (coffee business) profitability,” CEO Tim Cofer said in the statement. Shares of the company were up about 1 per cent in the premarket trading. The stock has risen about 31 per cent so far this year. Volumes of the company’s domestic refreshment beverages segment - its biggest revenue generator - rose 7.2 per cent for the reported quarter, while prices were up 3.7 per cent, from a year ago. Its U.S. coffee segment saw volume growth of 6.9 per cent after declining 4 per cent a year earlier. In April, Keurig closed its $18 billion acquisition of Dutch coffee and tea maker JDE Peet’s and last month named former Kimberly-Clark executive Russ Torres to lead the coffee business, which is set to become a publicly traded company early next year. The company reaffirmed its annual forecast for the third time this fiscal year, noting it includes roughly $8.3 billion to $8.4 billion in net sales and a 7 to 8 percentage point earnings-per-share growth contribution from the JDE Peet’s acquisition. However, quarterly gross margin came in at 48 per cent, compared with 54.3 per cent a year earlier, reflecting inflationary pressures and higher expenses such as marketing. The impact was partly cushioned by a $99 million benefit from tariff refunds. Several consumer-facing companies, particularly food and household brands, have warned of further price hikes next year to offset rising costs linked to the U.S. conflict with Iran. Keurig Dr Pepper posted adjusted profit of 66 cents per share for the quarter, compared with analysts’ estimates of 62 cents per share, according to data compiled by LSEG. Its quarterly sales rose 70.6 per cent to $7.34 billion, from a year ago. Analysts were expecting a rise of 70.2 per cent to $7.33 billion. -- (Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Vijay Kishore)
