Britvic records increase of 12.2% in adjusted profit after tax

Drinks group Britvic recorded an increase of 12.2 per cent in adjusted profit after tax to £49.8 million during the first half of its financial year.

Britvic’s brand portfolio includes Fruit Shoot, Robinsons, Tango, J2O, Teisseire and MiWadi, with PepsiCo brands such as Pepsi, 7UP and Mountain Dew Energy which Britvic produces and sells in the Republic and the UK under exclusive PepsiCo agreements.

For the 28 weeks ended April 15th, 2018, revenue increased 4.5 per cent to £733.2 million with organic revenue up 2.8 per cent.

Adjusted earnings before interest and tax (EBIT) increased 9.4 per cent to £80.5 million, with organic adjusted EBIT up 6 per cent.

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Profit after tax decreased 13.7 per cent to £33.3 million, including £21.6 million of planned business capability programme costs.

Adjusted earnings per share increased 12.2 per cent to 21.2p and the interim dividend increased 9.7 per cent.

The company said there was “strong growth” during the second quarter, overcoming poor weather in Ireland, the UK and France, and absorbing Palmer & Harvey bad debt provision of £3.3 million.

Britvic chief executive Simon Litherland said “good progress” had been made during the period.

“We have delivered a strong first half performance with solid revenue, margin and earnings growth,” he said.

“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 his strategic review, Mr Litherland said the Republic’s take-home soft drinks category, as measured by Nielsen, grew value by 6 per cent in the first half of the year.

“The first half has seen continued Britvic success in Ireland, with revenue and share growth in our owned-brand portfolio and continued expansion of the Counterpoint wholesale business,” he said.

“Our low and no sugar brands, including MiWadi, Pepsi MAX and Ballygowan, have continued to drive this growth. Single-serve packs were in growth, benefiting both ARP and margin.

“The incremental benefit of the East Coast acquisition was cycled in the second quarter, enabling us to increase the distribution of Britvic brands, including our range of premium offerings, in the growing Dublin on-trade sector.”

Mr Litherland said the Sugar Sweetened Drinks Tax, due to be introduced on April 6th, fell outside the period being reported after it was delayed at the last minute until May 1st.

“While it was delayed, there had already been some retailer stock-building ahead of the original implementation date,” he said. “The mechanisms of the Ireland tax are similar to the UK SDIL, with a volume-based charge in relation to the amount of total sugar, where sugar has been added.”

In terms of outlook, he said there were “exciting commercial plans” for the second half of the year.

“With a strong start to the year and exciting commercial plans for the second half, I remain confident of continuing to make progress this year,” he said.

“At the same time, we continue to invest in the long-term growth drivers of innovation, building a supply chain infrastructure fit for the future and expanding our international presence.”