par Britvic Plc (isin : GB00B0N8QD54)
Britvic plc Interim Results
Britvic plc (BVIC ) Britvic plc Interim Results – 15 May 2024 For the six months ended 31 March 2024 ‘An excellent first half of the year, confident of continued sustainable growth’
Group Financial Headlines:
Highlights:
1. Adjusted for constant currency exchange rates
Simon Litherland, Chief Executive Officer commented: “I am delighted with our excellent first half performance. Revenue growth of 11.2%, underpinned by volume growth of 4.4%, has translated into adjusted EBIT growth of 17.7% and earnings per share growth of 18.5%. We are also announcing our third share buyback of £75m over the next 12 months, reflecting our strong earnings, free cashflow generation, and positive outlook.
As expected, our market-leading growth comes from the combination of another strong performance from our scale family favourite brands, coupled with accelerated growth in Brazil and across multiple new growth spaces, such as London Essence, Aqua Libra and Plenish. We have increased the investment behind our brands by over 38% in the period. Looking forward, I am confident that we will deliver a strong full year performance. In the medium term, I firmly believe the continued execution of our strategy and growth drivers will allow us to sustainably outperform both the market and our historical top-line growth rate, leaving the company poised to continue our long-standing track record of delivering outstanding returns for our shareholders.”
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There will be a webcast of the presentation given today at 09:00am by Simon Litherland (Chief Executive Officer) and Rebecca Napier (Chief Financial Officer). The webcast will be available at www.britvic.com/investors with a transcript available in due course. To ask a question on the webcast, please dial +44 (0) 808 109 0700 or +44 (0) 33 0551 0200 and quote Britvic Interim Results when prompted by the operator.
Next scheduled announcement Britvic will publish its Q3 trading statement on 25 July 2024.
Note to editors
About Britvic Britvic is an international soft drinks business rich in history and heritage. Founded in England in the 1930s, it has grown into a global organisation with 39 much-loved brands sold in over 100 countries.
The company combines its own leading brand portfolio including Fruit Shoot, Robinsons, Tango, J2O, London Essence, Teisseire, Plenish, Jimmy’s Iced Coffee and MiWadi with PepsiCo brands such as Pepsi, 7UP and Lipton Ice Tea which Britvic produces and sells in Great Britain and Ireland under exclusive PepsiCo agreements.
Britvic is the largest supplier of branded still soft drinks in Great Britain and the number two supplier of branded carbonated soft drinks in Great Britain. Britvic is an industry leader in the island of Ireland with brands such as MiWadi and Ballygowan, in France with brands such as Teisseire, Pressade and Moulin de Valdonne and in its growth market, Brazil, with Maguary, Bela Ischia and Dafruta. Britvic is growing its reach into other territories through franchising, export and licensing.
Britvic is listed on the London Stock Exchange under the code BVIC and is a constituent of the FTSE 250 index.
Find out more at Britvic.com
Cautionary note regarding forward-looking statements This announcement includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Except as required by the Listing Rules and applicable law, Britvic undertakes no obligation to update or change any forward-looking statements to reflect events occurring after the date such statements are published. This announcement contains inside information related to a share buyback programme. The person responsible for making this announcement is Mollie Stoker, Company Secretary.
Alternative performance measures The annual financial statements of the Group are prepared in accordance with UK-adopted International Financial Reporting Standards (IFRS). The condensed set of financial statements included in this interim results announcement has been prepared in accordance with UK-adopted IAS 34 ‘Interim Financial Reporting’. We use certain non-IFRS alternative performance measures to provide additional information about the Group’s performance. Non-IFRS measures may be considered in addition to, but not as a substitute for or superior to, information presented in accordance with IFRS and are also used internally to measure and manage the business. Non-IFRS measures are defined in the glossary on page 14 and reconciled to the nearest IFRS measure in Appendix 1.
Market data GB, ROI and French take-home market data referred to in this announcement is supplied by Nielsen and runs to 30 March 2024.
Chief Executive Officer’s Review Today, we report an excellent performance for the six months to 31 March 2024. It is gratifying to see the careful planning, targeted investment, considered decision-making and sheer hard work of the whole Britvic team over the last few years all starting to shine through in material outperformance and tangible progress against our strategic priorities. After two years of elevated cost pressure across the business, inflation has begun to ease this year. Throughout this time, soft drinks and in particular, Britvic’s broad range of much-loved brands, has continued to offer consumers great products at affordable value.
I am delighted to share that we have achieved robust volume growth this half. In the first quarter, our volume increased by 1.7%, and in the second quarter it accelerated to an impressive 7.4%, resulting in a first-half volume growth of 4.4%. When coupled with positive price/mix, this has led to revenue and adjusted EBIT significantly ahead of last year, growing +11.2% (+10.9% on a reported basis) and +17.7% (AER +17.7%) respectively, on a constant currency basis. Alongside these excellent results, we have stepped up our investment in the business, with a 38.9% increase in A&P spend.
In our 2023 preliminary results and strategy presentation, we shared a framework of where we believe our future growth will come from. The particular opportunities we highlighted were:
In the first half, we have made excellent progress against these opportunities, with revenues growing across our portfolio of family favourite brands by +7.0%, Brazil by +34.7% and new growth spaces by +63.5%.
A growth strategy With a portfolio of market-leading brands, multi-channel routes to market, collaborative customer relationships and a well-invested supply chain, we set out our strategic framework as follows:
Our future focus remains on four key strategic priorities:
Market review Great Britain
In GB, we have delivered a strong performance, with volume increasing by 2.6% and revenue by 8.8%, and importantly revenue growing in both retail (+9.6%) and hospitality (+5.6%).
Last year, we installed another can line to meet the expanding demand for family favourite brands such as Tango and Pepsi MAX, and to enable us to launch a can format for Lipton Ice Tea. Pepsi MAX has continued to lead the cola category growth through both the core MAX proposition and our range of appealing flavours. This spring featured the unmissable global brand refresh of Pepsi, supported by a significant increase in investment. The refresh was supported in GB by a nationwide 360 degree marketing campaign, including billboards, digital takeovers, in-store activation, a new bold TV advertisement and engaging social media content. Launching a can format for Lipton Ice Tea has accelerated the brand's progress this year, with substantial volume growth underpinning a 27.6% increase in revenue. Fruit Shoot has also delivered excellent revenue growth, through compelling consumer marketing activation at key events such as Christmas and Halloween, including a partnership with Great Ormond Street Hospital. We have also executed a digital engagement programme which encourages children to be active and engaged in the things they enjoy. In our new growth spaces, London Essence continued to progress in the first half. In the GB hospitality sector, it is the only mixer in growth, and new account wins include the Silverstone racetrack, The Belfry Hotel & Golf Resort and Turtle Bay Restaurants. In the retail channel, we continue to build momentum as the fastest-growing mixer in the category, with Retail Sales Value (RSV) increasing +28% this half. New listings have also increased retail distribution by 36% since September. Last summer, we acquired Jimmy's Iced Coffee to access the fast-growing ready-to-drink (RTD) iced coffee category. Jimmy's is a great-tasting product with less sugar than the category leaders. We see an excellent opportunity to leverage Britvic's capability to accelerate Jimmy's growth. While we have only owned the business for less than a year, we have already had an impact by securing new listings, launching new pack formats and collaborating with Myprotein to launch a protein-focused variant. We are also working to utilise our supply chain and procurement capabilities to realise cost savings. Plenish has had a truly outstanding half, with revenue up 168.5%, demonstrating Britvic’s acceleration of an already powerful consumer brand. Our product innovation team successfully completed at the start of the year the extremely technically challenging creation of a Barista range of Plenish organic plant-based milks, developing the only range in the UK free from oils and gums, while still offering creaminess, foam, and flavour. Our whole organic plant-based milk range has strong growth momentum, becoming the number 3 brand, with retail sales value increasing 75% in the most recent market data. The performance of the health shot range, such as ginger and turmeric, has been equally impressive as we have expanded distribution across Grocery, tripling the RSV and leading to the status of number 2 market position and fastest growing brand. Again, we have applied our expertise to support the launch of new variants, such as green juices and a larger pack format for dosing. Aqua Libra has also delivered excellent growth, with combined revenue from our packaged and tap products increasing 35.3%. Earlier this year, we launched still and sparking water in cans, complementing the existing infused water range. Taps continue to make excellent progress, expanding distribution across its three different offerings of table bottling for hospitality, still/sparkling/hot taps primarily for workplace, and our innovative flavour tap. Brazil In the first half of the year, we delivered an outstanding performance, with revenue growth of 34.7%. Our existing brands have achieved double digit growth across the portfolio, with all of concentrates, ready-to-drink juices, tea, grape and Fruit Shoot performing strongly. A combination of factors underpinned the growth. We have had a real focus on perfect store execution, increasing the merchandising team headcount by 39% this year to ensure we execute great in-store feature and display. We have also focused efforts to win in the stores close to our factories, to optimise supply chain cost to serve and realise margin benefits. At the start of the financial year, we completed the acquisition of Extra Power and three supporting brands. The acquisition gave us immediate access to the higher-margin energy category and a more significant presence in the centre-west region. The integration was successfully completed earlier this year, and we are already realising the cost synergies and commercial benefits that we anticipated. A&P spend is a much smaller part of the operating model in Brazil than it is in our European businesses, but we have started to increase investment behind our key brands. Activity has included a "Back to School" campaign for Fruit Shoot, Carnival sponsorship in Rio de Janeiro, music events with Extra Power and building trial and awareness of Natural Tea through targeted activities. Other International Performance in Ireland remained robust, with revenue up 8%. Both price realisation and mix offset a modest volume decline in the half. February saw the launch of the Deposit Return Scheme (DRS) for PET bottles and cans, known to the public as Re-turn, in the Republic of Ireland. To date, return rates for the scheme are ahead of where they were for launches in similar-sized European countries. As expected, the launch has had a small impact on volumes, though it is still too early to evaluate the full impact and in other markets this has normalised over time. At the end of 2023, we completed a supply chain programme to release additional production capacity in the Irish factories, by introducing new work rosters, while simultaneously implementing cost-efficiency savings within the manufacturing and warehouse operations. This has enabled us to successfully reduce the cost and complexity created by introducing DRS. In the second half, we will prepare our PET lines for Tethered Caps, an EU legislation that will be enacted in July 2024, and expand our production capacity for the fast-growing Ballygowan Hint of Fruit flavoured variant. In France, performance significantly improved in the second quarter. Our branded syrup, Teisseire, has continued to face significant competition from private label alternatives, where retailers have chosen to hold pricing, exacerbating the price gap. A large part of our growth this year has come from manufacturing private label for our retail partners, though this is negative for mix. At the same time, the pure juice category has remained challenging for Pressade. Both Fruit Shoot and Moulin de Valdonne delivered excellent growth in the first half, with volume increasing and strong price/mix, realising double-digit revenue growth. Teisseire will be supported by a strong marketing and promotional activity programme in the second half, including TV, internet, social media and sponsorships, such as the women's Tour de France. Healthier People, Healthier Planet Our sustainability strategy, Healthier People, Healthier Planet, is a central and integrated part of our business. We have continued to invest in our team's personal development by launching new online learning tools, while also investing in expanded graduate and apprenticeship schemes across the business to develop the next generation. Our active equity, diversity and inclusion programme continues, ably stewarded by our employee-led network groups. We have huge focus on the wellbeing of our people, with an innovative example this year being our partnership with award-winning sleep-science experience the Night Club, who will be helping our shift workers across the supply chain to be happier and healthier at home and work. Our teams use an increasing number of volunteering days to support good causes in their local communities. From a Healthier Planet perspective, we have signed a power purchase agreement (PPA) to deliver clean energy. We can proudly say that 75% of the National Grid electricity used to make our brands in Great Britain comes from the sun, thanks to a vast 160-acre solar farm in Northamptonshire. As mentioned above, in the Republic of Ireland, a deposit return scheme (DRS) was introduced in February. With EU recycling targets at 77% by 2025 and 90% by 2029, the deposit return scheme marks a step change in driving consumer behaviour to boost recycling rates, tackle litter and create a circular economy. Britvic was a founding member and guiding voice in the introduction and administration of the scheme. At our Beckton site, the heat recovery system we announced last year is now fully operational, and we anticipate a 50% reduction in the site's carbon emissions. At our Rugby site, we have invested in new systems for our water processing plant, which means we can treat double the water used each hour and reduce the associated energy consumption by 60%. Outlook Britvic is a growing, resilient, well-invested and dynamic business, with much-loved brands and a team of highly engaged and talented people. I am delighted with our first half performance and the brand momentum we are carrying forward into the second half. Trading in April is in line with our expectations, and we have very strong plans for the balance of the year. Across our markets, we have a compelling and wide-ranging programme of consumer engagement and retail activation, including the Champions League final in London, headlining music festival sponsorships, the women’s Tour De France, and sponsorship of The Hundred Cricket. Consumers will also start to enjoy new flavours and innovations from their favourite brands. Notwithstanding economic and political uncertainties, I am confident that, as we head into the critical summer trading period for our European markets, we will deliver a strong full year performance. Looking to the medium term, we are confident in our strategy and that the accelerators within our growth algorithm will position us to sustainably outperform both the market and our historical top-line growth rate, leaving the company poised to continue our long-standing track record of delivering market-beating returns for our shareholders.
Financial Review Overview
We have delivered a strong start to the year, with revenue, adjusted EBIT margin, and adjusted EBIT ahead of last year. Group revenue increased 11.2% year-on-year on a constant currency basis (reported +10.9%), including a sequential improvement, with quarter one revenue increasing 8.1% and second quarter revenue increasing 14.5% on last year. Similarly, volume in quarter one increased 1.7%, and 7.4% in quarter two. Profit after tax increased 10.1% to £59.9m.
We have successfully executed pricing plans in each of our markets in the first half, through a combination of base price, pack mix and promotional optimisation.
Adjusted EBIT, on a constant currency basis, increased 17.7% (AER +17.7%) to £100.4m, resulting in an adjusted EBIT margin of 11.4%, a 60bps improvement on last year (AER +70bps). The increase in adjusted EBIT margin was achieved while A&P increased by over 38% on last year. Adjusted EPS increased 18.5% year-on-year. The interim dividend equates to 9.5p per share, a year-on-year increase of 15.9%, reflecting multiple factors including the accelerated profit delivery in the first half. We remain committed to a 50% dividend pay-out policy.
In the first half we have maintained debt leverage broadly flat on last year, while completing the acquisition of Extra Power in Brazil. In addition, we have paid dividends of £55.8m and completed the share buyback programme we announced last May, with £37.6m repurchased this financial year. Our confidence in the prospects of the business and cash generation has resulted in the Board’s decision to confirm a further share buyback programme of £75m over the next 12 months, subject to market conditions and other uses of capital.
Below is a summary of the segmental performance and explanatory notes related to items, including taxation, finance costs, and free cash flow ge | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||