Britvic streamlines production and supply as fizz returns

By Rod Addy contact

- Last updated on GMT

Related tags: Fruit shoot, Production line

Britvic's Fruit Shoot has recovered its market share to pre-recall levels
Britvic's Fruit Shoot has recovered its market share to pre-recall levels
Britvic was hit by £9.6M in costs through its abortive merger with AG Barr, but has shrugged this off with strong annual results and is targeting greater efficiencies and cost savings.

That’s according to md Simon Litherland and finance director John Gibney, speaking at its annual results presentation yesterday (November 26).

Britvic had faced millions of pounds in costs in the year to September 29, including £9.6M in mainly legal costs associated with its abortive merger attempt with AG Barr, said Gibney.

Other costs included factory closure write-off expenses of £12.9M. Costs associated with the recall of Fruit Shoot lines, carried over from last year after a six-year old boy choked on a spill-proof cap in 2012, totalled £8M, he said.

That added to the £17M incurred in the previous financial year, taking total recall costs to £25M, the company confirmed.

However, Gibney continued: “Our return to market plan for Fruit Shoot has been very successful and in Q4 (the firm’s fourth financial quarter) we benefited from full availability of Fruit Shoot and the ability to run a full promotional plan.”

‘Worked tirelessly’

The company claimed the brand’s market share had returned to pre-recall levels in Great Britain (GB) and was ahead of expected progress on the international stage. “The Britvic team has worked tirelessly to build the brand,”​ said Gibney.

Despite the costs it had incurred, Britvic was on track with its business strategy to considerably cut costs, said Litherland. “We are reducing production lines by 7%, which significantly improves our cost base and asset utilisation …

“We have reduced the number of suppliers in GB by 16% and by 29% in Ireland.”

The company had completed consultations regarding the planned closure of its Chelmsford and Huddersfield factories, announced in May and staff had been given the chance to transfer to other sites, he said. Production is scheduled to cease at these sites in the first quarter of 2014.

Following the closures, the Fruit Shoot production line at Chelmsford would transfer to the South of France, while the rest of its GB production would be unaffected, said Litherland. And J2O production would shift to its Leeds plant.

£30M cost savings every year

Given its efforts to streamline the business, Britvic was on track to deliver £30M in cost savings every year by 2016, £10M of which would help fund international expansion, said Litherland.

Meantime, he announced the restructure of Britvic’s management team to align it with international growth plans. This comprised five new appointments, including GB md Paul Graham, previously commercial director.

Other new reports included Ireland commercial director Kevin Donnelly, international md Simon Stewart and Jean-Luc Tivolle, md for France. The company is also recruiting for a strategic marketing director.

Considerable volume growth

In terms of product performance, Gibney highlighted considerable volume and price growth in GB in its carbonated drinks, led by Pepsi, which it bottles for PepsiCo.

Panmure Gordon analyst Damian McNeela hailed Britvic’s results, which reported strong growth in group sales and pre-tax profit as “better than our expectations”.​ And he called the more than £44M reduction in its net debt “a very creditable performance”,​ advising investors to buy into the firm.

Britvic boosted group revenue by 4.4% at constant exchange rates in the 52 weeks to September 29, from £1.26bn in its previous financial year to £1.32bn. Profit excluding interest, taxes and estimated decline in asset value rose 18.4% to £137.9M at constant exchange rates, from £115.6M.

Related topics: Drinks

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