Britvic profits fizz in the face of challenging year as low sugar alternatives surge

Britvic, PepsiCo's UK producer, defied a flat retail market hit by a CO2 shortage this summer to exceed expectations in its full year results, giving share prices a five per cent boost.

But as traders felt the sugar rush this morning, consumers have done the opposite, moving towards low and zero-sugar alternatives in the wake of the tax on sugary drinks imposed in April.

The figures

Profit before tax was £145.8m for the year ending 30 September, up 5 per cent against £138.8m last year, while revenues also saw a 5 per cent rise £1.5bn.

Net debt was £575.5m against £502.9m last year, while cash flow was £65m against £54.5m in 2017.

Earnings per share were 44.4p, up on 42.4p last year, while dividend increased 6.4% to 28.2p.

Why it’s interesting

Britvic’s positive results fly in the face of the government’s imposition of a sugar tax on sweet drinks earlier this year, adding 18p a litre on drinks containing more than 5g of sugar per 100ml and 24 p a litre for drinks with 8g or more per 100ml. But, perhaps feeling the pinch, consumers did not abandon soft drinks, switching to low sugar alternatives instead.

The company also rode out supply disruptions caused by a Europe-wide CO2 shortage in June and July, switching promotions to their still drinks range, which saw a spike in sales as a result.

Paul Hickman, analyst at Edison Investment research, said the company’s management deserved credit for “navigating headwinds from the sugar levy, the shortage of carbon dioxide in GB and Ireland, and the impact of business failures in the customer base”.

“The results therefore do demonstrate the resilience of the business, the strength of the portfolio, and its strong business relationships,” he added.

What Britvic said

Simon Litherland, chief executive, said:

“We have delivered a strong performance in a challenging environment. I am delighted that we have grown our stills brands, demonstrating that our investment in innovation and marketing is beginning to pay off.

“Whilst political and economic uncertainty will undoubtedly continue, we are confident we will continue our long-term track record of growing earnings, dividends and shareholder value.”