UK: Britvic optimistic after improved second half

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UK drinks group Britvic has unveiled a fall in full-year earnings and revenues as the move away from carbonates by consumers continues to take its toll. However, the management did draw attention to an improved second half profit performance.

The company said today (30 November) that total branded revenues reached GBP677.7m (US$1.3bn) for the year, a 2.6% fall over 2005. Carbonate revenues fell 6.8% to GBP332.5m, though this was offset in part by a 2.4% rise in still drink revenues to GBP321.7m.

Operating profit was largely flat, rising 0.5% to GBP73.7m. However, basic earnings per share fell 0.5% to 18.4p.

Operating profit rose 8.9% in the second half. The company said a focus on controlling costs resulted in the delivery of GBP13m of sustainable cost savings, including GBP11m of overhead savings.

The company added that successful innovation in the second half had focused on the growth areas of the market.

Branded revenue was broadly level in the second half after the decline in the first half. Stills revenue was up 5.6% in the second half, driven by new water brand launches and a solid performance from the key categories of adult, juice drinks and squash.

Meanwhile carbonates revenue fell only 4.7% in the second half, compared to a 9% fall in H1.

Paul Moody, Britvic CEO, said: "In the second half of our financial year we have achieved a marked improvement in our volume and revenue performance. We have maintained a sharp focus on ARP, cost savings, and cash management against the backdrop of a difficult carbonates market and continued growth in the stills market.

"The improved revenue trends seen in the second half have continued into the new financial year and have driven the group's trading performance over these early weeks. However given the volatility in the carbonates market we remain cautious on the outlook for this category. We are confident that in the year ahead we will continue to make progress on margins."

Looking forward, Moody added: "Britvic is well placed to benefit from the continuing consumer trend towards health and well-being and our new brand and product innovations, scheduled for launch in the first half of calendar 2007, remain focused on the growing stills category."

Sectors: Soft drinks, Water

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