logo-loader

Société Générale upgrades Britvic as UK market sees little impact from sugar tax

Published: 10:47 24 May 2018 BST

Robinson's juice on table
SocGen also upped its target price to 945p from 795p

French bank Société Générale has upgraded Britvic Plc (LON:BVIC) to ‘Buy’ from ‘Hold’ as the UK’s recently introduced sugar tax had little effect on a strong set of first half results.

In a note to clients, analysts at the bank said the sugar tax’s impact on the FTSE 250 drinks maker would be minimal, saying that “momentum in the business is strong”.

READ: Britvic shares rise as revenue increases but restructuring cost dents profits

“Britvic has chosen not to launch different pack sizes for sugar-added and sugar-free variants, with a higher shelf price for Pepsi than for Pepsi Max. This supports the spirit of the legislation, and also plays to its strength” analysts said.

They added: “Britvic reported revenue growth of 4.6% in the half (carbs an impressive +9%), and indicated it had gained both volume and value share. Growth in no-sugar Pepsi Max has outperformed the cola category, meaning it has taken share from Coca-Cola. In addition, Robinsons has returned to volume, revenue and market share growth, partly due to innovation launches, which are priced at a premium to the core brand”.

In addition to the rating upgrade, SocGen also upped its target price to 945p from 795p, along with its sales and margin forecasts for the company’s British carbonated drinks sector, in addition to its margin forecasts for the Brazilian market.

In its full-year results on May 23, Britvic reported revenues had increased 4.5% to £733.2mln, up from £701.3mln last year, while pre-tax profits for the period declined 13.7% to £33.3mln from £38.6mln.

The decline in profits included £21.6mln in planned costs for the company’s business capability programme, through which the company is hoping to achieve a minimum 15% return on its earnings before interest, tax, depreciation and amortisation (EBITDA) by 2020, and includes plans to shutter the company’s Norwich facility in late 2019.

In mid-morning trading Thursday, Britvic shares were up 0.8% at 822p.

Oriole Resources outlines 2023 achievements and future exploration plans

Oriole Resources PLC (AIM:ORR) CEO Tim Livesey and chief financial officer Bob Smeeton join Proactive's Stephen Gunnion with details of the company's 2023 financial and operational performance. Livesey highlighted successful exploration programs in Cameroon, at the Bibemi and Mbe projects,...

1 hour, 5 minutes ago