Sign up Australia
Proactive Investors - Run By Investors For Investors

Britvic revenues rise in third quarter despite impact of carbon dioxide shortage

Britvic has responded to the UK’s sugar tax by introducing more sugar-free and low sugar alternatives
Britvic
Britvic says it has delivered a 'strong underlying performance'

Beverage company Britvic Plc (LON:BVIC) said it is confident of meeting analysts’ full-year expectations after growing third-quarter revenue despite the impact of an industry-wide shortage of carbon dioxide.

The owner of Robinsons and J20 brands reported a 3.4% increase in revenue to £366.9mln for the quarter to July 8 as soft drink sales were boosted by the heat wave in Britain since the implementation of a sugar tax in April. 

REA D: Britvic shares rise as revenue increases but restructuring cost dents profits

Britvic has responded to the UK’s sugar levy by introducing more sugar-free and low sugar alternatives. It expects the levy's full impact by the end of the year but said early indications were positive.

Some 94% of Britvic’s owned brands and 72% of its overall portfolio are exempt from the levy.

"Britvic has delivered a strong underlying performance in the third quarter, through continuing outstanding execution of no sugar carbonates and substantial growth from our stills brands,” said chief executive Simon Litherland.

“Whilst the industry-wide shortage of carbon dioxide held back our ability to fully capitalise on the exceptional weather in Great Britain and Ireland, we leveraged the breadth and strength of our portfolio to moderate the impact. Consequently, we remain confident of achieving market expectations for the full year."

Navigating CO2 shortage

To offset the impact of the carbon dioxide shortage, the group temporarily scaled back promotional activity and reallocated some of its secondary feature space to still drinks.

The company said supply has now normalised, allowing it to begin rebuilding stock levels and gradually reintroduce promotions.

In Britain, revenue rose 8% with strong sales of carbonated drinks such as Pepsi Max and stills beverages including Robinsons and J20.   

Revenue in Ireland increased 11.3% while revenues in Brazil and the international segments edged up 10.2% and 8.7% respectively.

France, on the other hand, saw revenue drop 15% due to poor weather in June and a strong comparative last year. 

In mid-morning trading, shares rose 2.7% to 800p.

Britvic shrugs off 'several negative factors at play'

“There are many different levers in action with Britvic at present and the end result is that trading should still hit market expectations, which is quite impressive given several negative factors at play," said Russ Mould, investment director at AJ Bell.

Mould said the company's shift to low or no sugar products would have required a period of monitoring how the public has responded to product recipe changes in normal market conditions but the warm weather has distorted the situation.

The heat wave means Britvic still hasn't seen how the sugar tax has affected consumer buying habits while the CO2 shortage has added another hurdle.

“The task for Britvic is to, therefore, try and milk the sunshine while it lasts, particular as the carbon dioxide issue now seems to be going away," he said. "The assessment of the sugar tax will have to be done at a later date.”

View full BVIC profile View Profile

Britvic Plc Timeline

Related Articles

cake
April 17 2018
The group's major shareholders have staunchly supported the business while the AIM-listed group sorts out its financial position

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use