Britvic revenues dropped 2.6% to £1,256M in the wake of a £25M recall of its Fruit Shoot drink – sparked after a six-year-old boy from Essex nearly choked on a ‘spill-proof’ cap.
Damian McNeela, from city analyst Panmure Gordon, said the 2.6% decline in revenues for the 52 weeks to September 30 was “driven principally by the impact of the Fruit Shoot recall”.
It was initiated after Alexander Farries, from Colchester, started gasping after the lid came off his bottle. The cap was dislodged and he was unharmed.
The July 3 recall was originally estimated to cost the firm £1−5M, but it quickly ramped up the likely impact to £15−25M.
Britvic’s British portfolio includes Robinsons, J2O, Fruit Shoot, Tango and Drench, with MiWadi, Club and Ballygowan in Ireland, and Teisseire, Fruité and Pressade in France.
It also has exclusive bottling agreements with PepsiCo in Britain and Ireland for global brands such as Pepsi, 7UP, Lipton Ice Tea and Mountain Dew.
Tough market
McNeela said the figures reveal that the Fruit Shoot recall was “partially offset by a strong performance in GB carbonates”, which reported a 3% revenue growt
h to £517.9M in a “tough market”, largely driven by Pepsi.However, he added there was “little to cheer” for the firm outside of Britain.
“International sales were also impacted by the Fruit Shoot recall, particularly Belgium and Holland, which limited growth to 0.7% to £29.3M,” McNeela said.
He added that Ireland also remained challenging, with revenues down 14.8% to £138.7M, although France reported growth of 1.7% to £248.8M, across the 52-week period.
For the last quarter, weak trading figures in Britain and Ireland, where revenue slid by 4.3% and 8.5%, overshadowed a 13.3% jump in France that was driven by price rises.
McNeela said merger talks with Scottish Irn-Bru maker AG Barr were ongoing, with the companies working to a final deadline of October 31 to announce a firm intention to merge.
“We believe that in the absence of any details regarding potential merger synergies the shares look fairly-priced,” he added.
Recovered from lows
At the close of trading yesterday they were priced at 357p, valuing the company at about £865M.
“Britvic’s shares have recovered from their lows following the Fruit Shoot debacle. Year-to-date shares have risen by 11%, outperforming the FTSE All Share by 4%,” concluded McNeela.
Britvic chief executive Paul Moody conceded the recall had stifled progress in the second half of the year.
“Encouraging progress on Robinsons during the second half of the year has been overshadowed by the Fruit Shoot recall that materially impacted our overall full year outturn, and stills in particular.
“Following the Fruit Shoot recall in July, we have been focused on returning supply to normalised levels. Concurrently, we have been driving an improving performance from the strong brands across the group,” he added.
