J20 and Robinsons owner, Britvic Plc (LON:BVIC) managed to squeeze out some revenue growth in its first quarter, but uncertainty over the looming soft drinks levy in the UK and Ireland spooked the market.
Organic sales rose a paltry 0.7% to £328.7mln in the three months ended December 24, although once the acquisitions of Brazilian drinks business Bela Ischia and Irish suppliers East Coast are factored in, revenues were up 3.3% to £337.2mln.
UK still drinks sales plunge
Sales in the FTSE 250 group’s home UK market, which accounts for over half of all revenues, rose 1% to £194.0mln thanks to strong demand for its fizzy drinks, although that masked an almost 7% drop-off in stills sales.
Ireland and Brazil – both of which benefited from acquisitions this time last year – were the two star performers, with sales jumping 16.5% to £42.3mln and 22.6% to £35.8mln respectively.
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France – Britvic’s second-largest market – was one of the drags, with revenues falling 5% to £57.2mln over the quarter in what the company called “subdued” trading conditions.
Volumes down
International sales didn’t provide the little bump they did this time last year either, with sales in the US and other international markets diving 8.1% to £7.9mln.
Apart from Ireland and Brazil, volumes – litres of drinks sold – plunged across the board, down 2.6% on a like-for-like basis, as the company struggled to shift as many units as it did a year ago.
There are plans to try to boost that going forward, in the UK at least, with a premium range of the popular Robinsons squash due to be launched later this quarter.
Sugar tax uncertainty
Growing volumes may prove tricky though, with the Tango and Fruit Shoot maker having to contend with the sugar tax which is due to come into force in the UK and Ireland in April.
The levy will see manufacturers pay 18 pence per litre on soft drinks with more than 5 grams of sugar per 100ml and 24ppl on those with more than 8 grams per 100ml.
“We have delivered a solid start to the new financial year, with group revenue growing 3.3% ahead of a strong first quarter last year,” said chief executive Simon Litherland.
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“As we said at our preliminary results, the introduction of a soft drinks industry levy in the UK and Ireland brings a level of uncertainty, but we are well placed to navigate this given the strength and breadth of our brand portfolio and exciting marketing and innovation plans.
“In addition, our continued focus on revenue and cost management and the delivery of the final phase of our business capability programme means we remain confident of making further progress in 2018.”
Britvic shares fell 2.5% to 764.5p early on Wednesday.