The new CEO of Keurig Dr Pepper is optimistic about the second half of the fiscal year due to a recovery in coffee supply and the introduction of a new coffee brewer for premium pods.
Coffee Systems’ net sales for the second quarter ended June 30 increased by approximately 9 percent, from $1.10 billion to $1.20 billion. The retail dollar consumption of Keurig Dr Pepper’s single-serve pods increased 3.8% in channels monitored by IRI, a Chicago-based market research firm.
Ozan Dokmecioglu, then-chief financial officer, stated on a July 28 earnings call, “I’m pleased to report that our coffee supply recovery plan has been completed ahead of schedule, with part manufacturing output restored to levels that will provide full service to our partners and retailers.”
Mr. Dokmecioglu replaced Mr. Gamgort as CEO the following day, as previously announced.
Mr. Dokmecioglu stated that Keurig Dr Pepper will release a K-Cafe Smart brewer with global ID technology that recognizes the coffee pod and adjusts the brew in the third quarter. In addition, its multi-stream technology enables a broad temperature range.
Mr. Dokmecioglu stated, “This new brewer incorporates a new multi-speed product that enables consumers to create cappuccinos, lattes, and other specialty coffees using an interactive recipe experience found in the Keurig app.” “The K-Cafe Smart allows consumers to create a coffee shop experience at home for a fraction of the price and with greater appeal to younger households,”
Second-quarter net income for Keurig Dr Pepper decreased by 51 percent to $218 million, or 15 cents per share on the common stock, from $448 million, or 32 cents per share, in the second quarter of the prior year. The decline was due to a decline in operating income and the unfavorable impact of items affecting comparability year-over-year.
The quarter’s net sales increased by 13 percent, from $3.14 billion to $3.55 billion. Keurig Dr Pepper raised its forecast for full-year net sales growth from high single-digit percentages to the low double-digit percentage range.
Mr. Dokmecioglu stated, “During the quarter, our cost of goods sold increased across all inputs, including ingredients, packaging, and manufacturing labor.” In addition, we experienced a much higher inflation rate in transportation and warehousing during times of strong consumer demand.
The quarter’s inflation rate exceeded 17 percent, which was higher than the first quarter’s inflation rate of 15 percent.