Britvic profits take hit after Fruit Shoot recall
BRITISH soft drinks maker Britvic said production of its Fruit Shoot children's drink would be back to normal by January after a costly recall due to faulty caps, along with a cool summer, hit annual profit.
The maker of Tango and Robinsons drinks, which this month agreed terms on a £1.4bn merger with A.G. Barr, said on Tuesday underlying pre-tax profit fell 19pc to £84.4m in the year ended Sept. 30.
Britvic, which also makes and sells PepsiCo brands in Britain and Ireland, said a strong performance in its British carbonated drinks business and market share gains had been undone by a recall of Fruit Shoot drinks.
The recall cost £16.9m in the year ended September, and will cost up to £8m this financial year, it said, adding production levels would return to levels in line with historical demand by January.
The Fruit Shoot hit pushed group revenue down 0.8pc to £1.26bn pounds at constant exchange rates, impacting its British still drinks, international and French businesses, while its Irish operation continued to slump under tough economic conditions.
A wet summer has also hit the retail and leisure markets hard this year, adding to trading conditions already made difficult by consumers facing austerity measures, rising bills and muted wage growth.
Analysts at Panmure Gordon said the results were ahead of their expectations for a pre-tax profit of £79.5m pounds.
"We forecast that Britvic as a standalone business should be able to deliver a strong increase in profitability once it has worked through the issues caused by the Fruit Shoot recall. Specifically we forecast 27 percent adjusted pretax profit growth to 101.4 million pounds," the broker said in a note, referring to the current 2012/13 financial year.
Group adjusted net debt was £446.7m.
Britvic's all-share deal with Irn-Bru maker Barr, which is subject to both shareholder and regulatory approval, will create one of Europe's biggest soft drinks companies, named Barr Britvic Soft Drinks.
The enlarged group, to be run by Barr chief executive Roger White, will result in a 63pc stake for Britvic shareholders with AG Barr investors holding the rest.
Shares in Britvic were down 0.7pc to 397.1p, slightly underperforming the UK midcap index.