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Britvic to start share buyback

Revenues grew across the company's markets, with declining leverage allowing it to repurchase shares
Britvic to start share buyback
  • Out-of-home sales recover
  • Premium brands are a strategic priority

Britvic’s (BVIC) financial metrics soared against the pandemic-hit comparatives, with out-of-home revenues approaching 2019 levels. The soft drinks producer, which counts Fruit Shoot and Robinsons as members of its brand portfolio, increased the dividend by a fifth on the back of the results and announced that it would commence a £75mn share buyback programme.

The programme will start in the next 12 months. Chief financial officer Joanne Wilson said that “our confidence in the continued downward trajectory of our leverage ratio has resulted in the board’s decision to commence an initial share buyback programme”.  

The UK is Britvic’s key market, and it took almost 70 per cent of revenue in the half. Sales were up by a fifth to £493mn, with volumes growing by over 10 per cent, as out-of-home revenue jumped by 59 per cent. Other international revenue was up by 17 per cent to £162mn, with Brazil sales bringing up the rear on £65mn – up 15 per cent.

Alongside core brands like Tango and J2O, the company is also taking advantage of the premiumisation trend – developing global premium brands is one of its key strategic priorities. This helps push up margins, through Britvic brands like Mathieu Teisseire syrup and local brands like Nuts, the plant-based milk. Premium tonic London Essence gained retail share in the half while plant-based milks and shots brand Plenish was relaunched in the second quarter after being acquired last year. 

Management flagged that the company “implemented significant pricing activity” in the half to battle inflationary pressures. The shares are trading at 15 times forward earnings, according to consensus forecasts. Analysts expect earnings per share of 54p and then 59p for the 2022 and 2023 financial years, respectively. Hold.

Last IC View: Hold, 881p, 24 Nov 2021

BRITVIC (BVIC)    
ORD PRICE:847pMARKET VALUE:£2.27bn
TOUCH:846p-847p12-MONTH HIGH:1,018pLOW: 717p
DIVIDEND YIELD:3.0%PE RATIO:19
NET ASSET VALUE:168p*NET DEBT:140%
Half-year to 31 MarTurnover (£mn)Pre-tax profit (£mn)Earnings per share (p)Dividend per share (p)
2021 (restated)61739.811.66.5
202271959.317.27.8
% change+17+49+48+20
Ex-div:26 May   
Payment:6 Jul   
*Includes intangible assets of £404mn, or 151p a share