Britvic boosts profit despite tough markets

Soft drinks firm Britvic served up a strong set of interim results, after an improved underlying performance across the business, but cautioned market conditions remain challenging.

Pre-tax profit rose to £37.5m in the 28 weeks ended April 15th 2013 from £24.8m the same time a year earlier. Revenue slipped to £639.2m during the period from £641.1m last time on an actual exchange rate. On a constant exchange rate, revenue was up 0.4%.

Adjusted earnings per share rose 47.6% to 12.4p and the dividend has been increased 1.9% to 5.4p.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Strong margin and pricing growth was seen every business unit, the group said.

Underlying earnings before interest, taxes and amortisation (EBITA) for the first half increased 17.9% after adjusting for the timing of its marketing programme and the one off cost of the recall of Fruit Shoot.

As well as the recall, its markets experienced poor weather over March and Easter. The economic backdrop continued to be difficult with consumer discretionary spending remaining subdued, the group explained.

In the first six months of its financial year, the take-home market in GB saw volume fall by 1.7% and in the last 12 weeks it declined by 2.6%

However Britvic said it achieved strong pricing, revenue, brand contribution and margin growth in all areas of the business, with the exception of GB stills and Ireland because of availability of Fruit Shoot.

Bottles of Fruit Shoot were recalled due to a packaging safety issue last year.

Chief Executive Simon Litherland added: "Britvic has delivered strong first-half profit growth, a material improvement in cash flow and a reduction in net debt. This has been achieved by growing our average realised price, a continued focus on cost."

Britvic said strong momentum has continued moving into the second half, with substantially increased levels of marketing investment.

The group also announced a new cost reduction strategy, which includes merging its GB and Ireland businesses.

"We intend to change our operating model to generate stronger performance in our core markets and accelerate the increasingly attractive international opportunities, underpinned by a reduction in the cost base of £30m per annum by 2016."

Britvic said it is confident that we will deliver full year EBITA towards the upper end of our previously communicated range of £125m - £131m.

The group reduced adjusted net debt by £30.7m.

CJ