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Britvic Warns of Challenging Market, Rising Raw Material Costs |
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Friday, 25 July 2008 |
London - Soft drinks maker Britvic PLC, the British bottler for PepsiCo Inc., warned Friday that the take-home and licensed premises markets in which it trades will continue to record low growth while rising raw material costs remain a significant challenge for the sector.
The tough outlook sent Britvic's shares 10 percent lower to 229.5 pence (US$4.58), despite the maker of Robinsons Barley Water and Tango also reporting that sales rose 30 percent in the first 40 weeks of the fiscal year.
Britvic, Britain's second largest soft drinks maker behind Coca-Cola Enterprises, said that British and international sales excluding Britvic Ireland - the soft drinks operations of Ireland's Cantrell & Cochrane Group PLC it purchased in May - rose 3.7 percent over the period.
"Looking forwards, although we anticipate rising input and energy cost pressures, our strong focus on cost control allows us to remain confident about the delivery of earnings in line with market expectations for the current year," said chief executive Paul Moody.
In its home market, Britvic outperformed peers in both the stills and carbonates take-home market.
It reported volume growth of 7.8 percent for take-home stills, against a wider market decline of 1.2 percent, attributing that growth to increased promotion and the full roll out of its Drench and Gatorade brands.
In the carbonates market, Britvic's volume growth of 2.6 percent compared with overall market growth of 2.2 percent. It said its result was driven by a particularly strong Pepsi performance.
However, while the company said it was positioned to maintain outperformance in the take-out markets, it added that the licensed premise market "will remain challenging."
Like other soft drink and alcoholic drink manufacturers, Britvic is facing a decline in sales in pubs and clubs due to smoking bans across Britain and parts of Europe.
Britvic also said that raw material cost inflation remains a significant challenge for the sector "with particular cost pressures in oil, PET and energy-driven inputs."
The company now expects raw material costs to rise by 4.5 percent this year and also anticipated further rises next year. It said it is working "to at least partially mitigate" those increases through cost management.
Copyright 2004 Associated Press. All rights reserved. |
