UPDATE 1-Britvic confident despite costly product recall

Thu Oct 18, 2012 2:58am EDT

* FY group revenue down 0.8 pct to 1.26 bln stg

* Fruit shoot recall hit revenue growth by 2 pct

* Decline in UK and Ireland overshadows growth in France

LONDON, Oct 18 (Reuters) - British soft drinks group Britvic reported lower full-year revenue, blaming a sour final quarter on the costly recall of a popular children's drink.

The company, which is currently in talks with Scottish Irn-Bru maker AG Barr about a 1.3 billion pound ($2 billion) merger, said it was nonetheless confident about meeting its full-year expectations.

"We continue to place a strong emphasis on cash generation and rigorous cost management across the group," Chief Executive Paul Moody said in trading update on Thursday.

Britvic, which makes and sells PepsiCo brands such as Pepsi and 7UP in Britain and Ireland, was hit this summer by poor weather and a recall of its popular children's drink Fruit Shoot over faulty caps.

It estimated that the product recall impacted revenue growth by approximately 2 percent.

Group revenue for the year to September 30 inched down to 1.26 billion pounds, a decline of 0.8 percent at a constant exchange rate. Volumes were down 1.6 percent.

Poor trading in the final quarter in Britain and Ireland, where revenue slid respectively by 4.3 percent and 8.5 percent, overshadowed a 13.3 percent jump in France that was driven by price hikes.

Britvic said talks with AG Barr were ongoing. The proposed all-share merger would create one of Europe's leading soft drink companies, selling products ranging from Robinsons squash with Irn-Bru, the fizzy orange drink long-dubbed "Scotland's other national drink," alongside Scotch whisky.

Shares in Britvic, up nearly 12 percent since the beginning of the year, closed at 360 pence on Wednesday on the London Stock Exchange, valuing the company at around 865 million pounds.

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