WHAT'S NEW:
■ £1m-£5m impact from product recall
■ Issue relates to packaging on Fruit Shoot and Fruit Shoot Hydro
■ No impact in the US, Australia or Republic of Ireland
Britvic saw its shares marked sharply lower after it said that this year's pre-tax profits would be hit by between £1m and £5m as a result of a product recall on its popular Fruit Shoot children's drinks. At 316p, the shares now trade on a forecast PE ratio of just nine, a huge discount to rivals such as AG Barr and Nichols, but this latest blow to sentiment makes it hard to imagine Britvic closing that gap any time soon.
Encouragingly, the packaging issue behind the recall is isolated to the UK and Europe, so won't impinge upon Britvic's ongoing push into international markets further afield, not least the US where it signed new distribution deals last year. But there are growing concerns that recent trading will have been badly affected by the poor weather, potentially exacerbating ongoing pressures from stubbornly high input costs and a difficult economic environment that's seeing consumers switch from stills to lower-margin carbonated drinks.
