Shares in Britvic (BVIC) fizzed 3.4% higher to 950.5p on Tuesday after the Tango-to-Teisseire maker reinstated the interim dividend with a 6.5p payout.
The soft drinks group also served up news of ‘encouraging’ trading in the first weeks of the second half as UK lockdown measures begin to ease.
A drop in first half sales and profits came as no surprise given the impact of lockdowns and social distancing measures on the soft drinks market and FTSE 250 constituent Britvic appears well-placed to profit from the reopening boom.
ROBUST PERFORMANCE
For the half to March 2021, Britvic’s pre-tax profit fell from £53.6 million to £42.7 million on a 6.3% sales decline to £617 million as pandemic restrictions ‘heavily impacted performance in the hospitality sector and on-the-go consumption’.
However CEO Simon Litherland hailed Britvic’s performance as ‘robust’, with lockdowns driving households to stock up on popular own brands such as Wimbledon favourite Robinsons, Tango and J2O as well as Pepsi and 7UP, which Britvic produces and sells in Britain and Ireland under a lucrative valuable franchise bottling deal with PepsiCo.
PALATE-PLEASING PROGRESS
Litherland insisted Britvic has ‘continued to win in the channels open to us’ while gaining share in its key growth markets of Great Britain and Brazil.
‘Our cash management has been particularly strong, and I am pleased to reinstate our interim dividend,’ he added.
‘We have also made good progress on our strategic opportunities, such as simplifying our Irish business, entering the mainstream energy category in GB and Ireland by relaunching Rockstar with PepsiCo, and acquiring Plenish, a leading natural premium brand in the fast growing plant based drinks category.’
Litherland is optimistic about the future as Britvic enters the second half of the year and the key summer trading period, with Covid-19 vaccines being rolled out in the UK and across the European Union.
‘While it is very early in the journey towards recovery, we are confident that performance in the Out-of-Home channels will ultimately rebound strongly as restrictions continue to ease.’
Russ Mould, investment director at AJ Bell, remarked: ‘Although many of the leisure outlets selling its products have been shut on and off during the past year, Britvic has still been able to crack on with strategic developments.
‘These include increasing its digital presence, creating plans for more environmentally friendly packaging, and preparing for the relaunch of the Rockstar brand.
‘Under the circumstances, its ability to keep innovating and have a steady stream of product sales, albeit at reduced rates, has helped the business avoid any serious damage from the pandemic. Now it is well positioned to benefit as the on-trade (pubs, restaurants, hotels) reopens.’
