Keurig Dr Pepper has booked fourth-quarter results that beat analyst estimates despite the US group recording a $718m impairment for the period.
The Canada Dry owner exceeded market expectations in the period, with fourth-quarter net sales in the period growing 5.2% to $4.1bn, or by 6.2% on a constant-currency basis.
Keurig Dr Pepper also released a better-than-expected 2025 outlook, projecting a net sales increase “in a mid-single-digit range”. It is forecasting its adjusted diluted EPS growth will sit in the “high-single-digit” area in constant-currency terms.
The company said it expected this outlook to include “anticipated contribution” from its acquisition of Ghost last year.
In the fourth quarter of 2024, the group’s GAAP operating income declined 93.3% to $63 million. Full-year operating income dropped 18.8% to $2.6bn.
Keurig Dr Pepper pointed to “unfavourable year-over-year impact items affecting comparability”, including a $718m non-cash impairment linked to “intangible brand assets” mainly from the Snapple brand and goodwill in its US Warehouse Direct reporting unit.
The company also booked an accrual $225m charge in the year for costs related to terminating the Ghost brand’s current distribution deal. The business previously indicated it plans to move the existing distribution agreement for Ghost Energy over to Keurig Dr Pepper before it begins selling and distributing the brand.
Annual net sales grew 3.6% to $15.4bn, representing a 3.9% increase on a constant-currency basis.
Net income was down 33.9% at $1.4bn.
Industry analysts highlighted the weakness in the group’s US Coffee segment, where annual net sales dropped 2.6% to $4bn.
The division’s GAAP operating income declined 6.8% to $1.1bn, while adjusted operating income was down 3.2% at $1.3bn, both driven by “net sales decline and the impact of inflationary pressures”, the group said.
In a note sent to clients, TD Cowen analysts, reflecting on the US coffee division, said: “We think the 2025 forecast entails flat sales at best and pricing up low-single-digits”, as well as the first quarter being “in negative territory given the timing of their price increase in January”.
They added that “another price increase” could be likely in the future with coffee beans having “moved $50 higher since they contemplated the first phase”.
Barclays analyst Lauren Liberman said Keurig Dr Pepper’s outlook was “better than feared, with many assuming that green coffee cost inflation would preclude an algorithm guide”.
She added: “Given the timing of pricing versus inflation, [we] would anticipate EPS delivery will be back half-weighted, which has not been a well-received message this earnings season.”
