Monday 25 September 2017

Britvic's plants here may get production boost with UK recall woes

Peter Flanagan

Peter Flanagan

PRODUCTION at Britvic's Irish manufacturing plants may be ramped up after the company said a product recall in the UK would take much longer, and cost much more than originally thought.

Britvic shareholders were hit by more brutal news yesterday as the company issued a profit warning and said a product recall would cost up to five times more than originally thought, sending shares plummeting.

The company, which counts Club Orange and Ballygowan water among its brands, began to recall Robinsons Fruit Shoot and Fruit Shoot Hydro drinks in the UK at the start of this month because of a problem with a lid that could be a choking hazard. At the time, the group said the problem would cost a maximum of £5m (€6.3m). Barely a week later, however, that cost has mushroomed to between £20m (€25m) and £25m.

The recall does not affect Irish consumers, but it could provide an opportunity for Britvic's plants in Thurles and Limerick, which have spare capacity and could be used by the parent company to ramp up production to try to "fill the gap" in the UK.

In a statement, the company said that despite its "ongoing investigations", it had still not been able to fix the problems with the lid. It will roll out another lid as a short-term fix but this could take up to six weeks, while a long-term solution could take six months.

"It is difficult to be precise as to the full financial implications given the developing situation," Britvic said, but it confirmed there would be a "material financial change".

"We believe this will now have an impact on the group profit before tax in the region of £15m to £25m across the current and next financial year. This includes an anticipated impact in the 2013 financial year of between £5m and £7m."

If that wasn't bad enough, Britvic also admitted the poor weather and continuing downturn had hit sales.

"Trading conditions have not improved and the group now expects to deliver a result for the current financial year that is at the bottom end of market expectations, before taking account of the impact of the Fruit Shoot recall."

The two drinks affected had been strong sellers for the company in what is historically the busiest time of the year.

Shares fell more than 15pc in London trading.

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