20th May 2015 10:26
LONDON (Alliance News) - Soft drinks company Britvic PLC on Wednesday said its pretax profit rose in the first half of its financial year as an improvement in its margins offset declining revenue driven by a combination of a weak euro, lower volumes, and a disappointing performance for its still drinks business in the UK.
Shares in Britvic were down 4.4% to 731.96 pence on Wednesday, one of the worst performers in the FTSE 250.
Britvic said its pretax profit in the 28 weeks to April 12 was GBP51 million, up from GBP45.3 million in the 28 weeks to April 13, 2014. Revenue in the period was down to GBP650.3 million from GBP670.7 million, but the group's earnings before interest, taxation and amortisation margin improved to 9.9% from 9.0% a year earlier to offset the revenue decline. The improvement in the margin came from cost savings made over the year and from favourable raw materials prices.
Volumes declined by 0.3% in the half, with Britvic's GB stills and International volumes both struggling but partially offset by a solid performance in Ireland, a marginal increase in France and a flat performance for GB carbonates.
On the back of the rise in profit, the group hiked its interim dividend by 9.8% to 6.7 pence per share, up from 6.1 pence for the first half of 2014. It also said it has maintained its guidance for earnings before interest and taxation for the full year at GBP164 million to GBP173 million. That compares to Ebit of GBP158.1 million reported for its 2014 financial year.
"Despite the challenging market conditions we have delivered double-digit earnings growth, continued to improve our margin and further reduced debt," said Simon Litherland, Britvic's chief executive. "We have made significant progress executing our strategy which will continue to create sustainable value for shareholders. Whilst we expect trading conditions to remain challenging, guidance for the current year is unchanged."
In a separate statement on Wednesday, the company said Chief Financial Officer John Gibney will retire from his role in April 2016. Britvic said it has started the process of identifying a successor to Gibney.
Britvic said it sold 1.06 billion litres of soft drinks in the half, with averaged realised prices falling by 0.5% to push down revenue in the half by 0.7% on a constant currency basis.
The GB stills business, including the Robinsons squash and J2O fruit juice brands, saw volume decline to 184.5 million litres in the half year, down from 189.6 million a year earlier, pushing revenue down by 4.2%. Average revenue per litre also fell by 1.6%, as Robinsons lost market share in a competitive squash category to cheaper alternatives. J20 performed better, however, growing volume in the half on the back of multipacks in the grocery channel.
Volumes in the GC carbonates business, which includes Pepsi-branded products, 7UP and Tango, were flat in the half, but revenue increased by 0.8% on the back of a 0.9% rise in average revenue per litre. Margins in the carbonate business were boosted by a positive revenue mix, with growth in higher-margin single-serve pack sales.
In France, volumes rose by 0.8% but revenue was down by 7.7% due to the depreciation of the euro against sterling. Britvic gained pure juice, syrups and kids juice drinks market share in the country and margins were given a boost by growth in branded revenue and decline in private-label revenue. Revenue in Ireland also was hit by the weak euro, while volume growth in the country was offset in part by sales of lower-margin third-party brands in the licensed wholesale market.
The weakest performance came in Britvic's smaller international operation, where volume declined by 13% in the half due to a switch from a distributor to a direct-serve model in the Netherlands. That resulted in a one-off GBP3 million hit to revenue as stock was re-purchased from the distributor, the company said. Elsewhere, Fruit Shoot shipments to the US remained volatile, though the brand has gained market share in all regions.
Britvic said the performance of its stills portfolio was weaker than it had hoped in the half, though it remains confident on the outlook for the business based on coming product launches and marketing initiatives.
By Sam Unsted; [email protected]; @SamUAtAlliance
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