Shares in Britvic jumped 15 per cent after the soft drinks group reported earnings per share 10 per cent better than analysts were expecting. And worries that price pressures would cut into margins proved to be wide of the mark as operating margins for the UK and international business, which accounts for all the group's profits and 80 per cent of revenues, rose 70 basis points.
Britvic's progress comes against a background of falling demand for soft drinks in all categories including take-home sales and sales on licensed premises, but the group has successfully managed to increase market share. Sales of Pepsi, for which Britvic is the UK's sole distributor, rose by 2 per cent year-on-year, while volumes for 7Up and Tango also sparkled. Overall, UK carbonate sales rose 7.5 per cent to 496m litres. The Stills business put in anything but a flat performance with volumes up 6 per cent to 246m litres against a market down 6 per cent, buoyed by Robinson squash and energy drinks Drench and Gatorade.
However, the Irish market provides a greater challenge and volume sales were down 4.8 per cent, reflecting the fact that a third of revenue comes from third party sales to the licensed on-premise market which remains under pressure. The business only managed to break even.
Net debt remains high, but Britvic has recently secured a new multi-currency bank facility of £283m maturing in May 2012. Broker UBS is forecasting full-year pre-tax profits of £60m and EPS of 26.9p (£57m and 24.8p in 2008).
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| BRITVIC (BVIC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 305p | MARKET VALUE: | £659m | |
| TOUCH: | 303-306p | 12-MONTH HIGH: | 335p | LOW: 165p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 20 | |
| NET ASSET VALUE: | * | NET DEBT: | £443m | |
| Half-year to 12 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 455 | 7.1 | 2.30 | 3.80 |
| 2009 | 483 | 7.2 | 2.30 | 4.10 |
| % change | +6 | +1 | - | +8 |
Ex-div: 27 May Payment: 3 Jul *Negative equity | ||||
