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UPDATE 2-Britvic recovering from costly Fruit Shoot recall
November 27, 2012 / 7:51 AM / in 5 years

UPDATE 2-Britvic recovering from costly Fruit Shoot recall

* Year pretax profit 84.4 mln stg vs 105.1 mln stg in 2011

* Fruit Shoot recall cost 16.9 mln stg; up to 8 mln in 2013

* Sees Fruit Shoot production back to normal in January

By Neil Maidment

LONDON, Nov 27 (Reuters) - 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 1.4 billion pound ($2.2 billion) merger with A.G. Barr, said on Tuesday underlying pretax profit fell 19 percent to 84.4 million pounds 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 16.9 million pounds in the year ended September, and will cost up to 8 million 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 0.8 percent to 1.26 billion 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 pretax profit of 79.5 million 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 446.7 million pounds.

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 63 percent stake for Britvic shareholders with AG Barr investors holding the rest.

Shares in Britvic were down 0.7 percent at 0955 GMT to 397.1 pence, slightly underperforming the UK midcap index.

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