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Britvic's out-of-home and international sales struggle

Britvic expects big things from a brand relaunch and new market direction, but international revenue drop is a concern
November 24, 2021
  • At-home sales drove UK revenue growth 
  • Plant-based drink market entered 

As with last year’s results, soft drinks producer Britvic’s (BVIC) solid operating profit posting, helped by reduced costs, obscured a drop in reported revenues. The revenue drop was admittedly minor this time around, at half a per cent, and with pre-tax profit up by almost a third the group bumped up its annual dividend by 12 per cent.  

Britvic’s domestic market remains its revenue driver. UK sales were up 8 per cent to £956m, helped by at-home channel growth of 11 per cent. The channel was also up against 2019, reflecting the impact of the pandemic period on consumer habits. While out-of-home sales improved in the second half with the easing of restrictions, they are still below pre-pandemic levels. Using the actual exchange rate, ‘other international’ revenue plunged by 20 per cent as the French market was hit by on-trade and travel restrictions.  

Alongside its own brands such as Robinsons and Tango, the group produces certain PepsiCo brands. The Rockstar energy drink brand was relaunched, with a higher-priced product backed up by new packaging and advertising. Meanwhile, the acquisition of Plenish was completed which is the group’s first foray on the “high-growth plant-based drinks category”. Management said that “significant growth opportunities” are expected from these developments.

A promising and record free cash flow posting of £133m helped lower debt and strengthen the balance sheet, although it remains a cause for concern. Consensus forecasts estimate that adjusted EPS will rise from this year’s 44p to 61p in fiscal year 2023, but with European governments already introducing stricter pandemic policies as we enter the winter period, sales could be hit. Risks remain. Hold.

Last IC View: Hold, 829p, 26 Nov 2020

BRITVIC (BVIC)    
ORD PRICE:881pMARKET VALUE:£2.36bn
TOUCH:881-882p12-MONTH HIGH:1,018pLOW: 726p
DIVIDEND YIELD:2.7%PE RATIO:23
NET ASSET VALUE:157pNET DEBT:139%
Year to 30 SepTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20171.4313942.426.5
20181.5014644.428.2
20191.5511030.630.0
20201.4111135.621.6
20211.4114338.724.2
% change-0.5+29+9+12
Ex-div:16 Dec   
Payment:2 Feb   
*Includes intangible assets of £418m, or 156p a share