Out-of-favour branded soft drinks firm Britvic (BVIC) is showing some fizz, the shares up 5% to 574.5p on positive full year results.
Expectations heading into the numbers were subdued, so a return to like-for-like sales growth and a reassuring outlook statement are combining to trigger a rebound in the FTSE 250 stock.
Britvic combines owned brands such as Fruit Shoot, Tango and Wimbledon tennis tournament favourite Robinsons, with PepsiCo (PEP:NYSE) brands. These include Pepsi, 7UP and Mountain Dew Energy, produced and sold in the UK and Ireland under exclusive tie-ups with the New York-listed food and drink titan.
Since the Brexit vote, investors have been pricing in pressures placed on Britvic's input costs from bowed sterling as well as testing soft drinks industry conditions. Third quarter results (21 Jul) showed a 0.7% organic sales decline to £326.5m, not helped by a washout June.
Today's full year numbers to 2 October are surprisingly strong. Highlights include 10.1% top line growth to £1.43bn and 0.4% like-for-like growth (albeit on a constant currency basis and stripping out 2015 Brazilian acquisition ebba) to £1.32bn. There's also a 6.5% hike in the full year dividend to 24.5p to keep income investors happy.
OVERSEAS FIZZ
CEO Simon Litherland reports an 'outstanding year in GB Carbs', with like-for-like sales up 5.3%. A focus on no and low sugar enabled Pepsi Max, 7UP and Tango to deliver growth. Britvic turnaround architect Litherland does however concede 'we have been more challenged in stills this year', with the removal of the added sugar range of Robinsons in 2015 resulting in a decline in sales as fewer than expected consumers switched to the new formulation.
Litherland also flags some highlights overseas, where Britvic is growing its reach through franchising, export and licensing. 'Internationally, we have had an excellent first year in Brazil and Fruit Shoot continued to grow in France, USA with the launch of multi-pack, and latterly in Brazil following its recent launch in Sao Paulo,' enthuses Litherland.
Despite a tough Brazilian macro backdrop, Britvic grew volume and revenue with the Maguary and Dafruta brands, brought into the fold through the 2015 takeover of dilutes and nectar drinks specialist ebba, both gaining market share.
ON TRACK
Britvic believes '2017 will be another challenging year, with difficult trading conditions and input cost inflation for the first time in several years. The UK's vote to leave the EU and the proposed soft drinks levies in GB and Ireland from April 2018 have created additional uncertainty.'
He also says 'the new financial year has started well and although 2017 will be another challenging year, we expect to deliver pre-exceptional EBITA in line with current market expectations', guidance pitched at between £180m to £190m by Britvic at the beginning of the year.
