Shares in soft drinks giant Britvic (BVIC) cheapened 3.3% to 952.5p on Wednesday after the Robinsons, Tango and Fruit Shoot maker reported a plunge in annual profits amid challenging French and Irish markets.
However this masked stronger than expected growth in British carbonates revenue, boosted by growth in low- and no-sugar brands, as well as a better than expected showing in Brazil where Britvic has now enjoyed six consecutive quarters of sales growth.
ANNUAL PROFITS PLUNGE
For the year ended 29 September, pre-tax profit dropped almost 25% to £110.3m after Britvic absorbed restructuring costs and booked a £31.2m write-down of assets held for sale in France; this isn’t much of a surprise to the market because earlier this month Britvic announced the sale of its struggling French private label juice business, as well as three manufacturing sites and its Fruite brand.
GALLING GALLIC SHOWING
France remains a tough market for Simon Litherland-led Britvic. Like-for-like sales were down 9.2% last year and volumes softened 8.7% due to a managed decline in private-label sales and declining Fruit Shoot sales in competitive grocery market conditions.
Compounding the pain was the EGalim law, which continues to have an adverse effect on pretty much all consumer goods businesses in France. This was introduced to rebalance commercial relationships between smaller suppliers and retailers by regulating promotional activity and margins.
The consequence of the legislation has been price increases for Britvic’s branded products, which have adversely impacted its grocery channel volumes.
Elsewhere, 2019 also proved a more challenging year for the Irish business which lapped strong 2018 comparatives boosted by that year’s summer heatwave.
Like-for-like sales on the Emerald Isle declined 1.6%, crimped by volume declines from Ballygowan water, although Britvic put up strong numbers in Brazil, where it leads the liquid concentrates market through its Maguary, Dafruta and Bela Ischia brands.
