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Keurig Dr Pepper (NASDAQ:KDP) posted a small gain in early trading on Thursday after the Plano, Texas-based company was able to offset a weak quarter for the coffee business.
During Q4, the beverage giant saw sales increase 1.7% to $3.9B. On a constant currency basis, sales advanced 1.1%, driven by net price realization of 4.8%, partly offset by lower volume/mix of 3.7%. Sales in the U.S. Refreshment Beverage segment increased 6.8% to $2.2B, driven by net price realization of 7.5%, partly offset by a modest decline in volume/mix of 0.7%. This performance reflected manageable elasticities, continued market share gains, and the contribution from KDP’s sales and distribution partnership with Nutrabolt for C4 Energy. It was a different story in the U.S. coffee segment, which saw sales decrease 9.9% to $1.2B, driven by net price realization of 0.8%, which was more than offset by a volume/mix decline of 10.7%. International sales increased 11.5% to $495M. On a constant currency basis, international sales advanced 6.5%, driven by net price realization of 3.6% and volume/mix growth of 2.9%. The strong performance globally was noted to reflect continued momentum across markets.
Adjusted operating income growth during the quarter reflected higher net price realization, productivity, and earned performance incentives related to C4 Energy, partly offset by the impact of the volume/mix decline and higher SG&A costs, including increased marketing investment.
CEO update: “2023 was a year of significant progress for KDP. Broad-based market share gains across our portfolio and entries into attractive white spaces supported our revenue momentum. Gross margin expansion resumed, as the relationship between inflation, pricing, and our redoubled productivity efforts improved throughout the year and helped fund investments in our brands and capabilities. We delivered on our financial commitments while simultaneously enhancing the composition of our earnings profile and strengthening our balance sheet.”
Shares of Keurig Dr Pepper (KDP) gained 0.76% in premarket trading to $31.84 vs. the 52-week trading range of $27.66 to $36.23.