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Britvic Improves Profits and Margins

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Britvic Improves Profits and Margins

Britvic Improves Profits and Margins
November 26
12:11 2015

Despite a 0.6% drop in revenue to £1.30 billion Britvic increased EBITA by 7.1% to £171.6 million, resulting in 100 basis points improvement in EBITA margin to 13.2%, for the 52 weeks ended 27 September 2015, as the UK-based soft drinks group focused on building sustainable profit and margin improvement through continued disciplined cost management. Britvic sold over 2.1 billion litres of soft drinks, an increase of 0.9% on the previous year, during the period with Average Realised Price (ARP) of 60.5p, declining by 1.5%.

The disappointing summer weather in Great Britain and Ireland contributed to a revenue decline in these markets in the final quarter and was a significant drag on the full year performance. This was partly offset by the strong performance in France where the weather was particularly good this summer.

During the year, Britvic completed the acquisition of Empresa Brasileira de Bebidas e Alimentos (ebba), the leading supplier of liquid concentrates and the number two supplier of ready-to-drink nectar drinks in Brazil for R$580 million (£120.8 million). The transaction provides Britvic with immediate access to the sixth largest soft drinks market and the largest concentrates market globally. The deal is in line with Britvic’s long-term sustainable growth strategy, a central pillar of which is to pursue international expansion.

In 2016, Britvic plans to invest an additional £70 million to £80 million capital in its GB supply chain to start to create a best in class supply chain, generating a minimum annual cash return of 15% on an on-going basis.

Simon Litherland, chief executive of Britvic.

Simon Litherland, chief executive of Britvic.

“In May 2013, I laid out a new strategy for the group, with a focus on driving growth in the kids, family and adult categories, where we have market-leading brands. In 2015 we continued to make good progress against this strategy,” says Simon Litherland, chief executive of Britvic. “We have delivered another strong set of results, with margin growth and profit significantly ahead of last year, despite challenging market conditions. In all of our core markets, we continued to take volume and value share. I’m pleased to have completed the acquisition of Ebba in Brazil, which will create significant value for shareholders in the future.

He continues: “2016 will see significant developments and investment in the drivers of our future growth. We have established the route to market for Fruit Shoot multi-pack in the USA, which we will launch in the first half of calendar 2016. We are also planning a major investment programme in GB, which will deliver further efficiencies and flexibility in our supply chain. We have seen a slow start to the year, reflecting the continued challenging market conditions. However, with our compelling marketing and innovation plans and our continued focus on disciplined cost management we are confident of increasing our profitability in 2016.”

Britvic expects 2016 EBITA in the range of £180 million to £190 million, including Brazil.

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