Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
The Britvic (LSE:BVIC) share price shot up today on release of its preliminary results for the year ending 29 September 2013 and the announcement that it has entered into a new distribution agreement with Pepsico Americas. Britvic shares are up 3.13% to 626.00 pence, continuing growth in its share price over the past 12 months, including reaching an all-time high of 635.00 at 9:35 am.
Britvic is proving that a company can make a silk purse out of a sows ear of a year. Saddled with the costs and potentially adverse public response to the recall of Fruit Shoot in 2012 (≈ £8 million) and another £9.6 million in one-off expenses for legal fees accrued as a result of the the failed merger with AG Barr (LSE:BAG), conventional wisdom might assume that Britvic could not deliver a good year. But one mark of a solidly operating company is the ability to make good things happen in the midst of difficult times.
On this date last year, Britvic’s share price was 400.00 pence. Buying on that date and holding BVIC shares would have generated a 56.5% return for investors. That sure beats the interest any bank would have paid over that period.
The Results Report
BVIC announced solid fundamental results and expectations for more of the same to come in FY2014.
- Revenues up 4.7%. That may sound modest, but we’re talking about a £6 million increase from £1.26 billion to £1.32 billion.
- Pretax profit up 28.1% to £108. million from £84.4 million.
- Free cash flow increase of 41.4% to £103.5 million from £62.1 million
- Net debt decreased by 10% to £402.3 million from £446.7 million
The icing on the cake was a 13 pence per share final dividend.
The Pepsi Partnership
BVIC has entered into a 15-year agreement with Pepsico for expansion of production and distribution of its Fruit Shoot products in nine more US states, increasing market coverage to a total of 41 states. On the local side of the coin, Britvic’s Finance Director, John Gibney, reminded us that the company is continuing to experience healthy volume and price growth in the UK for the carbonated drinks that it bottles and distributes for Pepsi.
Strategic Savings
Do you recall what I said at the beginning of this article? “One mark of a solidly operating company is the ability to make good things happen in the midst of difficult times.” Assuming the verity of that observation, Britvic is one remarkable company. Although he anticipates “the consumer environment to remain challenging next year,” CEO Simon Litherland also said that “We have made good progress on the strategic initiatives that we communicated back in May and remain on-track to deliver £30 million per annum of cost savings from 2016.” The strategy is to invest one-third of those cost savings into the company’s international expansion plans.
I look for 2014 to be an exciting year for Britvic and all the investors who are along for the ride.
