Britvic posts sunny set of results

Soft drinks producer Britvic (BVIC) has published a cheerful set of full-year results, with revenue, volumes, profits and margins all on the up. 

Management was upfront about the fact that a difficult start to 2021 - plus good weather this summer - flattered figures for the year ended 30 September 2022. However, sales have now comfortably overtaken pre-pandemic levels and adjusted earnings are edging closer to past highs.

Britvic is far from immune from inflationary pressures and the cost of living crunch, but management stressed that it occupies a “resilient and growing category” and that the consumption of non-alcoholic beverages “continues to increase”. 

This is borne out in the group’s figures. In Great Britain - Britvic’s biggest market - volumes rose by 6 per cent and average revenue per litre sold rose by 9 per cent. Together, this resulted in a 15 per cent jump in divisional revenue to £1.1bn. Brazil is growing at a similar clip, with revenue up by 16 per cent at £143mn. 

As sales climbed, free cash flow remained high at £128mn. This allowed the group to pay down some of its hefty debt pile and return £106mn to shareholders through dividends and share buybacks.

One of the big challenges for Britvic, which owns brands such as Robinsons, Tango and J20, is staying ahead of the curve in terms of consumer taste. While ‘out-of-home’ sales struggled during the lockdown, the group is now focusing on immediate consumption products as people spend more time on the go. 

‘Innovation brands’ also seem to be performing well, with revenue climbing by 49 per cent to £108mn this year. Quite how long “a unique tap proposition” that offers flavoured water alongside still, sparkling and hot water will remain popular remains to be seen, but premium brands focusing on plant-based milk and coconut water should certainly push up margins in the medium term. 

For now, however, we’d like to see how Britvic copes with further inflationary pressures, and how it manages its big pile of debt. Hold. 

Last IC View: Hold, 847p, 17 May 2022