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Strong First Half From Britvic

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Strong First Half From Britvic

Strong First Half From Britvic
May 24
12:09 2018

Britvic, one of the leading branded soft drinks businesses in Europe and the largest supplier of branded still soft drinks in Great Britain and the number two supplier of branded carbonated soft drinks, has reported a 4.5% increase in revenue to £733.2 million, with organic growth of 2.8%, for the 28 weeks ended 15 April 2018, compared to the corresponding period last year. Adjusted EBIT increased by 9.4% to £80.5 million and adjusted EBIT margin rose by 50bps. Organic adjusted EBIT margin, on a constant currency basis, improved by 40bps.

During the first half, Britvic sold over 1.2 billion litres of soft drinks, an increase of 3.6% on the previous year, with ARP (Average Realised Price) of 57.4p, increasing by 0.5% on a constant currency basis. Profit after tax decreased 13.7% to £33.3 million, including £21.6 million of planned costs primarily related to the business capability programme (BCP), which is designed to build a platform for future growth.

The company is also entering the soft drinks industry levy environment in Great Britain with strong momentum, with its Robinsons brand back in growth and Pepsi MAX continuing to outperform a highly competitive cola category.

Britvic is continuing to make good progress with its business capability programme (BCP). It is anticipated that the full cost benefits guidance of a minimum 15% EBITDA return will be fully realised from 2020. Upon completion, the production network in Great Britain will comprise of three sites located along the spine of the country in London, Rugby, and Leeds. This will increase efficiency and reduce road miles, and also help accelerate Britvic’s ability to respond to changing consumer trends with agility and pace by expanding its range of liquids, pack sizes and configurations. The programme is already delivering both cost and commercial benefits, for example the 3 litre PET and 250ml slim line can that are now in trade.

Operationally Britvic anticipates that the final phase will now end with the closure of the Norwich factory in late 2019. The Leeds and London sites’ work have been completed and the new lines and warehousing are now fully operational. The year ahead involves the installation of three new PET lines, an aseptic line, a combined heat and power (CHP) plant and completion of the high-bay warehouse at Rugby. Britvic is now in the final year of elevated capital spend for the BCP. In 2019 capital spend will drop to a much lower level, significantly improving free cash flow generation.

Simon Litherland, chief executive of Britvic, comments: “We have delivered a strong first half performance with solid revenue, margin and earnings growth. We have also made good progress in innovating to meet consumer needs, growing our international presence and transforming our supply chain. While it is too soon to guide on the ongoing consumer impact of the soft drinks levy, early indications of the competitor and customer response are broadly as we anticipated. We have exciting commercial plans in place for the second half and I remain confident of continuing to make progress this year.”

In addition to its strong position within the soft drinks market in Great Britain, Britvic is an industry leader in Ireland, in France and in Brazil. Britvic is also growing its reach into other territories through franchising, export and licensing.

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