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Britvic’s brands benefitted from a hot summer and no Covid restrictions

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Revenues and profits at Britvic have fizzed higher as the group’s range of soft drinks proved popular over a hot summer and the out-of-home market recovered from the pandemic.

The group, which owns the likes of Fruit Shoot, Robinsons, Tango, J2O, as well as the UK licence for PepsiCo brands, said that pricing activity, promotional strategy, management of the mix and disciplined cost control helped mitigate the impact of inflation during the year ended 30 September 2022.

Despite pushing up prices to recover higher costs, Britvic also registered volume growth, which it said demonstrated the strength of its brands.

Revenues increased 15.5% to £1.6bn in the year, with growth across the retail and hospitality channels as the latter reopened fully following the end of Covid restrictions.

Adjusted EBIT rose 16% to £206m, while pre-tax profits jumped 30% to £175.1m.

CEO Simon Litherland said: “We have delivered excellent results, with strong growth in volume, revenue and profit, in the face of significant headwinds.

“Our strategy has momentum, delivering accelerated top-line growth through consistent execution across our portfolio of trusted brands. We recognise that there are significant inflationary pressures on our consumers, customers and suppliers, and we remain focused on mitigating costs in a responsible manner through efficiency initiatives and revenue management, while continuing to invest in our brands, people, sustainability and infrastructure.”

He added that uncertain economic environment made forecasting consumer demand difficult.

“We draw confidence however from the continued resilience and growth of our category, our brands and our talented people. Our strategy is working, with clear drivers to continue our consistent track record of growth and delivery of superior returns for all our stakeholders.”

Shares in the group moved 2.1% higher to 787p as markets opened.

Morning update

Bakkavor Q3 trading update

Bakkavor has warned its full-year profits will be at the lower end of its forecasts as volumes were hit by the squeeze on household budgets.

The group this morning reported revenue growth of 15.3% to £542.5m in the 13 weeks to 25 September, with like-for-like sales up 12.7% to £530.5m.

A like-for-like rise of 11.9% to £445.3m in the UK for the third quarter was mostly driven by price increases, but Bakkavor said volumes held up through the summer.

However, pressure on households caused by soaring inflation in energy bills and food prices hurt volumes at the group in September.

Price increases and sustained demand also helped the US business grow revenues 46.3% to £67.5m, a 26.3% like-for-like rise.

Despite the growth in the US, Bakkavor warned a reduction in volume over a contractual dispute with a customer would hit profits in the remaining weeks of the year.

Bakkavor said the group continued to trade in line with market expectations and preparations for Christmas were progressing as planned, but adjusted operating profits for the year would now come in at the lower end of its forecast range.

CEO Mike Edwards said the group contiued to operate in “an incredibly challenging environment”.

“Bakkavor has proven itself to be a resilient business effectively navigating the turbulence of recent years. We are now taking further decisive action to ensure we deal with the ongoing headwinds and protect future profits.

“These actions, combined with our strong balance sheet, breadth of capability and products, customer relationships and growing market share, means we are well-placed to deal with the short-term challenges, and deliver our longer-term ambitions for colleagues and stakeholders.”

The group expects its new plans, which include potentially closing two UK factories, to deliver savings of £15m in the 2023 financial year and £25m on an annualised basis.

Although, it is estimated that costs related to the plan will come in at £20m.

Pets at Home interims

Record customer levels have driven a 7.3% increase in first-half sales at Pets at Home to £727.2m, with a like-for-like rise of 6.4%.

Revenues for the vet operations rose 12.4% in the 28 weeks to 13 October, whle retail revenues grew 6.8%.

Group underlying pre-tax profits fell 9.3% to £59.2m in the half as the business was hit with increased freight and energy costs.

But there was no change to the full-year guidance, with profits of £131m expected.

CEO Lyssa McGowan said: “In my first six months as CEO, I have spent my time forming a deep understanding of the business and sector, learning from the ground up how the business operates.

“I am more convinced that Pets at Home is well positioned to capitalise on an attractive growth opportunity in our structurally growing pet care market, supported by our unique blend of products and services, deeply embedded culture and expert, passionate colleagues, and partners.

“Our first-half performance shows progress and resilience across the business. In a challenging macro-environment, the pet care industry remains in growth across all channels, and we have continued to acquire new customers at an impressive rate, setting new records for customer numbers in recent months.”

Morning share prices

The FTSE 100 moved 0.6% higher to 7,494.79pts.

Bakkavor shares plunged 6.3% to 88.5p on the back of its update, while Pets at Home sank 5.4% to 287.6p.

Other than Britvic, early risers included Kerry Group, up 1.5% to €93.82, Imperial Brands, up 1.1% to 2,179p, and Compass Group, up 0.9% to 1,828p.

Yesterday in the City

The FTSE 100 increased 1% to 7,452.84pts yesterday.

Shares in Cranswick jumped 3.8% to 3,204p after the protein producer posted a double-digit rise in first-half sales.

Other risers included Marks & Spencer, up 2.5% to 122.9p, Britvic, up 0.6% to 766p, and AG Barr, up 1.2% to 497.5p.

Deliveroo, McBride, Virgin Wines UK and Just Eat Takeaway were among the fallers, down 5% to 87.2p, 4.4% to 22.8p, 3.6% to 67p and 1.6% to 1,790.2p respectively.