Strong volume growth in its soft drinks business, allied to better realised prices and cost savings, have pushed up interim profits at Britvic.
The group, in which Permira - the private equity firm - holds a 14 per cent stake, increased its interim dividend by 10 per cent in response to its improved trading performance. Britvic last week agreed to pay €249.2 million for the soft drinks business of C&C, the Irish drinks group. The deal will combine Britvic's rights to the Pepsi and 7UP brands in the UK with C&C's rights to the names in Ireland as well as bringing the Ballygowan water brand into its fold.
Responding to reports that Britvic wanted to pick up rights to Pepsi across more European markets to deter a private equity takeover bid, Paul Moody, chief executive, said that the company would continue to look at international expansion, which "may or may not include Pepsi franchises".
He said that the group's strategy since its 2005 flotation had been to look at markets outside Britain for acquisition, but it was a question of what was available to buy.
He said management would be meeting Permira this week, as well as its other major shareholders, to discuss the results and future plans. Operating profits before exceptional items rose 30.1 per cent to £24.2 million, with operating margins up from 5.7 per cent to 6.8 per cent. Pre-tax profits were up 61.7 per cent from £9.4 million to £15.2 million, before exceptional charges, down from £14.7 million to £4.9 million.
Mr Moody said that the group had outperformed the soft drinks market in the first half of its financial year, to mid-April. But he cautioned that the second half, covering the summer, was usually more volatile and said that the market faced tough comparisons with last year.
Mr Moody said he expected the majority of the group's growth in the future to come from the stills market as customers switched away from fizzy drinks. Group sales rose 9.3 per cent to £354 million, with revenues from still drinks up 8.5 per cent to £167 million and from carbonates up 9.6 per cent to £175 million. - (Financial Times Service)
