Pepsi Max and Robinsons owner Britvic (BVIC) has struggled to take advantage of the ongoing heatwave following extensive disruption to the supply of carbon dioxide in the UK and Ireland.

However, a continuation of the hot weather could give a nice boost to its fourth quarter, particular as the CO2 issue appears to have been resolved.

Its third quarter period to 8 July saw 3.4% sales rise to £366.9m, down from 4.5% growth over the same period last year.

Following the start of the controversial sugar tax, Britvic is unsure of the full impact yet but believes the shift from full sugar to low or no sugar drinks is accelerating.

In the UK, sales have surged 8% although this falls to 1.9% when the sugar levy has been excluded with Pepsi gaining market share thanks to its Pepsi Max brand.

Carbon dioxide supplies have returned to normal but the soft drinks manufacturer has been forced to delay promotional activity.

Squash brand Robinsons and J20 are also standout performers for Britvic, helping to contribute to 11.9% growth in the GB Stills division.

Outside of the UK, Britvic enjoyed a robust performance with the exception of France, where sales fell 15%. The poor performance has been blamed on ‘exceptionally poor weather’ in June and a strong comparative period.

Numis analyst Damian McNeela says Britvic’s still drinks should enjoy strong momentum over the rest of 2018 and could potentially benefit from the levy due to lower sugar levels.

McNeela believes the company’s portfolio can benefit in the tougher environment, but is awaiting further evidence, keeping his forecasts unchanged and recommendation at ‘hold’.

Shore Capital analyst Phil Carroll says the question now is will the hot weather continue and can Britvic take advantage of the increase in demand with the CO2 issue behind it?

‘We leave our full year forecasts unchanged so we are looking for adjusted EBIT of £203.4m and EPS of 53.2p, which we believe is broadly in line with market consensus.

‘We do not expect market expectations to change materially either. Therefore, with seasonally important months ahead and the CO2 issue behind the company, there could be upgrades to come if the weather holds.’

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Issue Date: 24 Jul 2018