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UK: Ailing CSDs hit Britvic's first-half

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Britvic has reported depressing figures for its first half, blaming a UK soft drinks market that has "changed significantly".

The soft drinks business, which floated in December, said today (25 May) that sales for the 28 weeks to 16 April dropped by 5.3% year-on-year to GBP323.5m (US$607.3m). EBITDA and profit after tax also fell significantly, by 9.4% to GBP43.4m and by 32.3% to GBP6.5m respectively.

While noting that the first half of its year is seasonally less important than the second, Britvic blamed the poor figures on consumers moving away from the full-sugar carbonate market and veering more towards health and wellbeing.

"It has been a difficult first half with an unexpected sharp decline in the carbonates market since Christmas, affecting both sales and profitability," said Paul Moody, Britvic's chief executive. "We have not seen the level of recovery in the carbonates market that we anticipated at the time of updating the market in April.

"Management now believes that it will deliver earnings for the full-year modestly below the current range of market expectations but the continued market volatility suggests that a range of outcomes is possible," Moody warned.

Specifically, the company saw carbonate revenues fall by 9% on the corresponding period a year earlier to GBP159.8m. Stills revenue, meanwhile, fell by a more modest 1% to GBP153.7m. The total stills market grew by around 7% in the period, driven by waters, pure juces and dairy, "where the company does not have a developed presence," Britvic noted.

Despite the poor figures, the company was upbeat about its innovation and NPD. "A number of new brands and brand extensions have been launched in the first half of the year," the company said. "Three new brands, Drench, Pennine Spring and Fruit Shoot H2O have been successfully delivered on time and are performing in line with management expectations.

In the first four weeks of the second half, Britvic noted a dip in total revenue of 4% on last year, but said it was encouraged by growth in stills revenue of 9%. The carbonate market continued its downward trend, with the company's revenues falling by 14%.

In March, the soft drinks business issued its first profit warning just three months after floating.

The UK's second largest soft drinks group floated in December last year, at a price of GBP494m or GBP2.30 per share.


Sectors: Soft drinks, Water

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