Keurig Brewer And K-Cup Sales Decline Impacting Q4 Revenue Profit

WATERBURY, VT -- Falling K-Cup sales hit Keurig Green Mountain Inc.'s revenue and profits in fourth quarter. In the quarter, ended Sept. 30, revenue fell 13% to $1.04 billion from 1.2 billion in the comparable 2014 quarter. Net profit dipped 33% to $94.6 million, or 61¢ a share, down from $141.1 million, or 86¢ a share, a year earlier.

Sales of single-serve capsules, representing most of KGM's revenue, fell 9%, while revenue generated by brewers and accessories dropped by 32%.

"Our results for the quarter and the year reflect the competitive and dynamic marketplace in which we operate as well as the steps we are taking to position our company for longer-term growth and value creation," said Keurig chief executive Brian Kelley. "While we expect marketplace conditions will remain challenging in the near term, we have a stronger product lineup and price positioning as we enter the new holiday season."

Performance also is being helped, he said, by the availability of a refillable K-Cup that lets people to use their own ground coffee in Keurig brewers.

Kelley said the company's priorities for 2016 are to reinvigorate its hot system and continue the rollout of its Kold single-serve soda machine that hit the market this fall. Its goal is to sell between 60,000 and 100,000 Kold machines next year.

Analysts have criticized the cup-at-a-time cold beverage machine for its $370 price tag and the cost of the capsules. Coke capsules, for example, sell for $4.99 for a four-pack and make 8-fl.oz. servings.

Keurig in August unveiled a multiyear productivity program expected to cut $300 million in costs over three years, which includes reducing its workforce by about 5%.

The company said that for its fiscal year 2016, it expects sales growth of flat to low single-digits when adjusted for currency and adjusted earnings of $3.25 to $3.45 per share.