Cost-conscious shoppers lost their taste for more expensive still drinks during the recent wet weather, switching instead to cheaper fizzy varieties such as Pepsi and Mountain Dew. The lag in passing on higher raw material costs didn't help Britvic, either, trimming underlying pre-tax profit by 10 per cent and operating margin by 60 basis points. However, there are grounds for optimism in the second half and it looks like the summer's now finally arrived, too.
Margins should improve over the next six months given the full benefit of price increases and potential cost-savings of £8m. And management remain happy with targets for the year, despite a difficult first half. Britvic's core UK carbonates division grew revenue by almost 7 per cent and won market share, while the popularity of Fruit Shoot helped boost international sales by over 10 per cent. But trading down by consumers and heavy promotional activity meant revenue from GB Stills was down 3.6 per cent and the Irish business had a terrible time, too. Sales there fell 11 per cent and, given there's no sign of recovery in the near term, another round of cost-cutting is under way.
Broker Nomura, which trimmed estimates in April, forecasts adjusted EPS of 35.3p compared with 33.7p in 2011.
BRITVIC (BVIC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 345p | MARKET VALUE: | £835m | |
| TOUCH: | 344-345p | 12-MONTH HIGH: | 457p | Low: 284p |
| DIVIDEND YIELD: | 5.2% | PE RATIO: | 14 | |
| NET ASSET VALUE: | *negative | NET DEBT: | £606m | |
| Half-year to 15 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 633 | 20.1 | 6.60 | 5.10 |
| 2012 | 641 | 24.1 | 7.70 | 5.30 |
| % change | +1 | +20 | +17 | +4 |
Ex-div: 30 May Payment: 13 Jul *Negative shareholders' funds includes intangible assets of £316m, or 131p a share | ||||
