UK: Britvic Fruit Shoot recall should be "one-off cost impact" - analyst
A recent Fruit Shoot recall will cost Britvic in third-quarter results
Heavy rain will add to a damp Q3 for Britvic, but a recent product recall won't cause long-term damage, an analyst has predicted.
The UK-based soft drinks firm last week estimated a recall of its Robinsons Fruit Shoot and Fruit Shoot Hydro brands in the UK could hit profits by up to GBP5m (US$7.8m). However, in a report today (9 July) analysts Investec said the recall is an unhelpful but one-off blip.
“Ultimately, this is an unfortunate and untimely issue, which may have some residual reputational impact, but which should not affect the company financially beyond the current year,” Investec said in a note.
“Further, Fruit Shoot My-5 is not being recalled, no other Robinsons products have been affected, and this recall does not affect Fruit Shoot in the US, Australia or the Republic of Ireland.”
Recent downpours in the UK and Ireland are more of a worry for Britvic, the note said, and could push group revenues down by 1.7% in the third quarter even though last year's Q3 was also soft.
The rain will mean a 2.6% drop in revenue in the UK and a 5% fall in Irish volumes, the note predicted.
International revenue should retain healthy growth, especially in the US where a new franchise model is performing well for Britvic, Investec said. In a note last week, the analysts said the model could "fundamentally re-base the value of the company".
Investec downgraded its full-year EBIT estimate of Britvic by GBP5m to GBP132m (US$204.5m) to reflect the impact of the product recall.
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