Keurig Dr Pepper quarterly revenue beats expectations fueled by U.S. demand

The logo for Keurig Dr. Pepper appears above a trading post on the floor of the New York Stock Exchange, Thursday, July 12, 2018. (AP Photo/Richard Drew, File)

Keurig Dr Pepper reported second-quarter slightly revenue above Wall Street expectations on Thursday, driven by strong demand for its energy drinks and soft beverages, especially in the U.S.

Why it is important

The Snapple maker enjoyed resilient demand for its higher-priced ready-to-drink beverages, including Yoo-Hoo and Crush, and through the popularity of its majority-owned energy-drink maker, Ghost.

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The company’s results mirror those of bigger rivals PepsiCo’s and Coca-Cola’s, both of which recently beat quarterly estimates on strong demand.

Key quote

“Though the back half will present new challenges, we are on track to deliver our 2025 outlook,” said CEO Tim Cofer.

Market reaction

Shares of Keurig Dr Pepper, which rose about four per cent so far this year, were flat in premarket trading.

Context

Instability arising from U.S. President Donald Trump’s fluctuating tariff policies and the resulting trade tensions has led to a decline in consumer spending.

Keurig also faces a direct risk from tariffs on its business in Canada and Mexico, especially due to the Canadian boycott of U.S. products, and the impact of tariff-driven coffee prices.

By the numbers

Net sales for the quarter rose 6.1 per cent to US$4.16 billion, compared with estimates of US$4.14 billion, according to data compiled by LSEG.

Keurig Dr Pepper posted an adjusted profit of 49 cents per share, in line with analysts’ estimates.

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The Sun Drop maker’s volumes grew five per cent compared to a 1.8 per cent rise a year ago, with Ghost contributing 4 percentage points to the volume growth.

Net sales in the U.S. beverages segment rose 10.5 per cent compared to a 3.3 per cent rise in the year-ago quarter.

The company continues to expect annual net sales to grow in the mid-single-digit range and adjusted profit to grow in the high-single digits.

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Reporting by Neil J Kanatt in Bengaluru; Editing by Shailesh Kuber