Britvic writes down Irish business

BRITISH SOFT drinks group Britvic has taken an impairment charge of £104.2 million (€123 million) against the value of goodwill and property at its Irish business, which it acquired from CC for €249 million in 2007.

This followed another tough year of trading for the company in Ireland, with price pressure again evident both in the retail and licensed sectors as the recession continued to affect consumer demand.

Britvic Ireland’s revenues declined by 5.4 per cent to €179 million in the year to the end of September 2010, even though it achieved a 1.3 per cent rise in volume sales.

This compared with a contraction of 10.7 per cent in volumes in the previous year.

Its earnings before interest, tax, depreciation and amortisation fell by 37.8 per cent to £8.4 million.

Grocery performed well for the company in Ireland, but sales to the licensed sector declined.

Sales to supermarkets increased by 4.3 per cent in volume terms but fell in value by 5.4 per cent.

This indicates pressure from consumers for value.

In terms of the impairment charge, £89.6 million related to the carrying value of Britvic Ireland’s intangible assets.

The company took a hit of £14.6 million on the value of property assets here.

Britvic also incurred restructuring costs of €5.7 million in the past year. To date, Britvic has taken restructuring costs of about £20 million in Ireland, but achieved savings of £25 million.

Speaking on a media conference call yesterday, Britvic chief executive Paul Moody said there were no green shoots of recovery in Ireland.

In spite of this, he said Britvic remained supportive of its Irish operation – the number one soft drinks business here.

“The environment is challenging . . . but we remain committed to the Irish business for the foreseeable future,” he said.

The company is currently reviewing its “go-to-market strategy” for Ireland in light of the continued recessionary pressures.

Mr Moody declined to comment on whether this might involve redundancies among its 800 staff, or pay cuts.

He said the results of the review would be released early in the new year.

The listed company said yesterday that as a result of the shrinking Irish market, it has been utilising capacity at its Irish plants to supply stock to its British business.

Britvic acquired a number of soft drinks brands from CC in 2007, including Ballygowan water and Club carbonated drinks.

It plans to launch two new products in Ireland next Spring: Juicy Drench and Mountain Dew Energy, which launched successfully in Britain this year.

At group level, Britvic’s revenues rose by 14.6 per cent to £1.13 billion.

On a like-for-like basis, excluding an acquisition in France, the rise was 5.9 per cent.

Its pre-tax profit rose by 21.5 per cent to £104.6 million.

The company announced an 11.3 per cent increase in its full-year dividend payment to 16.7 pence.