Analysts predict Britvic margin increase

By Dan Colombini

- Last updated on GMT

Margins at the soft drinks firm are expected to rise in the next three years
Margins at the soft drinks firm are expected to rise in the next three years
Margins at soft drinks firm Britvic are expected to rise in the next three years despite analysts predicting mixed figures ahead of the firm’s annual results next week.

The firm will report preliminary results on Wednesday (November 30). Experts have forecast a 2% decline in profit before tax to £107M for the period ending November 30, as a result of higher financing costs.

Operating profits will also fall by £110 to 10.7%, reflecting the impact of higher input costs and the margin dilution associated with the acquisition of Britvic France, analyst have said. Group EBITDA is expected to rise 2% for the period.

Efficiency programmes

Damian McNeela, an analyst at Panmure Gordon, said: “We maintain our buy recommendation ahead of Britvic’s 2011 results on Wednesday 30th November.

“We expect the soft drinks sector to remain resilient in 2012 and expect the company’s cost optimisation and efficiency programmes to begin to deliver improved margins, resulting in low double digit annual EPS growth over the next three years​.”

Divisionally analysts are predicting that the firm’s UK margins will decline to 38.6% with brand contribution increasing by 5.8% to £194.2M. These figures benefitted from consumers switching to better value products at the expense of stills, according to McNeela.

“We forecast France will contribute £61.9m to brand contribution indicating a margin of 25.3%. In Ireland we expect the tough consumer environment to result in a 15% decline in brand contribution to £54.4m and we forecast that International brand contribution will increase by 23% to £11m,” he added.

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