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Monster Beverage’s 4Q15 Sales Faced Currency and Other Headwinds

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4Q15 sales disappoint

Monster Beverage (MNST) disappointed investors with lower-than-expected sales in 4Q15, which ended December 31, 2015. The company reported net sales of $645.4 million in 4Q15, missing the consensus Wall Street estimate of $699.6 million. We’ll discuss currency headwinds and other factors that impacted the company’s 4Q15 sales. Monster Beverage announced its 4Q15 results after markets closed on February 25.

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Roadblocks to sales growth

Monster Beverage’s net sales in 4Q15 grew 6.6%—versus sales growth of 19% in 3Q15 and 12% in 4Q14. Currency headwinds dragged down Monster Beverage’s 4Q15 net sales by $19.7 million. Advance purchases by customers before a price increase in August 2015 had a $11 million adverse impact on 4Q15 net sales.

Net sales in the quarter were also impacted by $11.8 million due to de-stocking in certain EMEA (Europe, Middle East, and Africa) countries. Some existing international Monster distributors have been de-stocking in anticipation of the company’s transition to Coca-Cola (KO) bottlers in certain countries. Under a strategic deal between Coca-Cola and Monster Beverage, which closed in June 2015, Coca-Cola will be the preferred global distribution partner for Monster Beverage’s products.

Monster Beverage’s sales in fiscal 2015 rose 10.5% to $2.7 billion. Currency headwinds impacted the company’s net sales by $84.3 million. The PowerShares DWA Consumer Staples Momentum Portfolio (PSL) has 4% exposure to Monster Beverage.

Peer performance

Beverage giants Coca-Cola and PepsiCo (PEP), which have a presence in over 200 countries, continued to grapple with currency headwinds in 4Q15. Coca-Cola and PepsiCo reported declines of 8% and 6.8%, respectively, in their 4Q15 sales. Dr Pepper Snapple’s (DPS) 4Q15 sales rose 2.5%, driven by favorable product mix, package and segment mix as well as price increases.

In this series on Monster Beverage’s 4Q15 performance, we’ll discuss the company’s earnings, margins, proposed acquisition of American Fruits & Flavors, stock price trends, and valuation.

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