CO2 shortage takes the fizz out of Britvic's results
Despite Britvic struggling to capitalise on the heatwave, the hot weather has been just the tonic for UK grocery sales.
Tuesday 24 July 2018 09:38, UK
The Europe-wide shortage of carbon dioxide has taken the fizz out of Britvic's results, with the UK's biggest supplier of branded soft drinks struggling to make the most of the heatwave.
The maker of Fruit Shoot, Robinsons, Tango and J2O also said the impact of the government's soft drinks levy was difficult to assess because of the unusually warm weather.
Britvic has scaled back on promotions for its carbonated drinks to concentrate on its sugar-free and non-carbonated beverages.
In a statement to the London Stock Exchange, chief executive Simon Litherland said: "Whilst the industry-wide shortage of carbon dioxide held back our ability to fully capitalise on the exceptional weather in GB and Ireland, we leveraged the strength of our portfolio to moderate the impact."
Third-quarter revenue at Britvic rose 3.4% to £366.9m, compared with 4.5% growth in the same period a year earlier.
Year-to-date revenue increased 4.2% to £1.1bn, the company said, while revenue excluding the soft drinks industry levy decreased 0.6% over the third quarter.
Britvic, which makes Pepsi in the UK, said carbon dioxide supply had now returned to normal and it expects to hit its full-year target.
A shortage of food-grade carbon dioxide during the World Cup stoked fears that beverages could be rationed.
Heineken and Coca-Cola Great Britain were among the drinks companies hit by the shortage, which occurred after the plants which produce the gas shut down for maintenance.
UK grocery sales have also benefited from the hot weather and the World Cup - rising 3.7% in the 12 weeks to 15 July. Kantar Worldpanel said this has been the fastest rate of growth this year.
During the week that the England football team played both Colombia and Sweden, sales of alcohol surged to £287m - a record outside of Christmas and Easter.
And Fever-Tree, which makes carbonated mixers, said adjusted profit has soared 35% to £34m - brushing off any concerns about carbon dioxide supply as it continues its international expansion.
Neil Wilson, chief market analyst at Market.com, said: "Amid the deluge of profit warnings from retailers, it's nice to see there is a comfortable familiarity about upgrades from some stocks and Fever-Tree has delivered again.
"Another profit upgrade came as sales fizzed in the first half, the outlook for the US push is looking very good and UK sales remain very firm. After a relatively cautious statement in the March full-year numbers, we're back to normality now with an upgrade from the board - its seventh in a year and half."
While Fever-Tree's stock soared 13.7% as the company said 2018 results were "comfortably ahead" of expectations, Britvic's shares slipped almost 1%.
Shares in Tesco, Morrisons and Sainsbury's were little changed in early trading.