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Britvic’s (BVIC) annual profits have been hit by the closure of its Fruit Shoot multi-pack operation in the US and the sell-off of factories in France, despite posting solid results in its UK carbonates business.

Organic revenue for the year to 29 September increased 1.4% to £1.55bn, driven by strong performance in its UK carbonates business and growth in Pepsi sales.

Organic adjusted EBIT increased 4.4% to £214.1m, with a solid 40bps improvement in organic adjusted EBIT margin.

However, reported profit after tax declined 30.9%, due to adjusting items of £84.6m. As well as adjusting items related to the Business Capability Programme and past pension costs, Britvic incurred one-off costs from the closure of the Fruit Shoot multi-pack operation in the United States, and additional adjusting items in relation to the proposed sale of the juice manufacturing sites in France.

In the US Britvic said: “We do not believe sufficient momentum has been generated in Fruit Shoot multi-pack to build a sustainably profitable business.

“As a result, we have taken the decision to exit the multi-pack operation and refocus our resources in the United States on the growth opportunities in our partnership with PepsiCo for Fruit Shoot single serve and with London Essence, our premium mixers and sodas brand.”

In France, revenues declined 9.2%, driven by an 8.7% fall in volume with falls across its private label and branded portfolio.

Britvic made a charge in France relating to the revaluation of its juice business in France held for sale to Refresco of £31.2m, and related transaction costs to date of £2.5m

This dragged back 5.2% revenue growth in carbonates, excluding the UK soft drinks industry levy, with ARP growth of 4.7%

Britvic said Pepsi had “another very successful year”, with revenue growth of over 6% and Pepsi Max is now the biggest cola variant in the UK by volume

It relaunched Tango during the year, with a range of new flavours, a pack redesign and a multimedia marketing campaign, helping revenue grow 13%, gained market share and attracted 900k more shoppers.

Revenue from stills increased 0.4%, led by Robinsons, Refresh’d and Lipton Ice Tea

Internationally, it has posted six consecutive quarters of revenue growth in Brazil, driven by innovation and increased distribution. Revenue was up 9.9% in the year achieved through a balance of ARP and volume

CEO Simon Litherland commented: I am pleased to report that Britvic has once again delivered a strong performance, with good momentum in our key brands and categories. In 2019 we have increased revenue, adjusted margin and EBIT, as well as significantly improving free cashflow generation. Our commercial execution, innovation agenda and revenue management continue to deliver results. Our transformational business capability programme is now complete - and importantly forms a key part of our broader commitment to building a more flexible and sustainable business model going forward.

Building on this strong platform, I am confident that Britvic is well placed to capitalise on the future growth opportunities in the years ahead. While we anticipate conditions to remain challenging, we fully expect that we will make further progress in 2020.”

Morning update

British American Tobacco (BATS) has announced that it is “on track for a strong year” in a pre-close trading update ahead of its 1 January end of year.

BAT expects “a strong financial performance on an adjusted basis” with a good performance from Combustibles, with strong price mix and share gains, strong results in the US and a growing share in new categories in the second half.

Overall full year constant currency adjusted revenue growth will be in the upper half of its 3-5% long term guidance range

While constant currency adjusted operating profit growth in the upper half of its 5-7% long-term guidance range.

This growth has been underpinned by a good performance from combustibles, with strong price mix and share gains. Global industry volumes, will be down around 3.5% for the year, with BAT volumes broadly in line with the industry.

Performance was particularly strong in the US, with constant currency revenue growth in line with 3-5% guidance range, supported by good pricing and reduced discounting.

It will also post good revenue growth and growing market share in New Categories in the second half of the year.

However, full year New Category constant currency revenue growth at the lower end of our range of 30-50%, reflecting the recent slowdown in the US vapour market

CEO Jack Bowles commented: “We expect to deliver a strong performance in 2019, building on the good progress we made in the first half. Our focus on our global strategic brands is delivering share gains and strong price mix in combustibles, both globally and in the US. Increased investment and new product launches are delivering good New Category revenue growth in H2, despite the recent slowdown in the US vapour market.

“We believe that the issues around vaping in the US should lead to a better and stronger regulatory environment in which we are well placed to succeed. In summary, we are delivering on our priorities. We are driving value growth in combustibles, we are investing to deliver a step change in New Categories and we are transforming the business to create a stronger, simpler, more agile BAT. We are on track for a strong year.”

Brewing and pub company Marston’s (MARS) has posted full year revenue growth across all segments in the year to 28 September, though margins tightened as costs remained “challenging” in the sector.

Total underlying revenue increased by 2.9%. This reflected the positive impact of new openings and pub acquisitions and like-for-like sales growth in pubs, and growth in brewing helped by new distribution contracts with New River, Trust Inns, Charles Wells and Young’s.

It posted sales growth of 0.8% with growth in both wet-led and food pub segments, with average profit per pub in line with last year reflecting balanced pub portfolio

It also saw continued growth in its brewing segment despite challenging comparatives.

Total brewing volumes were up 1%, strong growth in independent free trade, with 2.5 million composite barrels of beer delivered to one in four of UK pubs

It also completed the integration of Charles Wells, delivering £4 million targeted synergies, and agreed a new 15 year licence agreement signed with Shipyard

Total brewing revenues increased by 3.1% to £389.3m, principally reflecting volume growth in our core business and the benefits of the new distribution contracts in the year. Underlying operating profit in the segment increased by 1.9% to £32.6m.

Overall underlying EBITDA of £221.9mn was maintained compared to last year and operating profit dipped to £178.7m from £182.5m.

Group operating margins were 0.8% behind last year. Marston’s said cost challenges “remain a significant issue for the sector”, particularly people and property costs.

In addition, operating margin was impacted by converting pubs to franchise-style agreements and the impact of the acquisition of 15 community pubs in the first half-year.

CEO Ralph Findlay, commented: “We are making good progress with our debt reduction plans and are ahead of schedule in meeting the accelerated £70m of disposal proceeds which we are targeting in the current year.

“We continue to benefit from Marston’s balanced business model and our Taverns wet-led community pubs and brewing businesses have both once again outperformed the market, building on an outstanding year last year. We are employing a renewed focus on the proposition in our food-led pubs and remain well placed to benefit from reduced supply in this market segment, of which there is beginning to be some evidence.

“Our principal focus remains to reduce our net debt by £200 million by 2023 - or earlier - and the measures we are taking now will result in a high quality business which is cash generative after dividends and capital expenditure. Trading is on track for the initial weeks of the current year and we are well prepared for the all-important Christmas and New Year period.”

On the markets this morning, the FTSE 100 is up another 0.2% to 7,421.3pts.

Early risers include Stock Spirits Group (STCK), up 3.3% to 197p and Premier Foods (PFD), up 2.8% to 41p.

Fallers include Hilton Food Group (HFG), down 3.4% to 989p, Britvic, down 3.4%t o 951.5p and Bakkavor, down 2% to 124.6p.

British American Tobacco is up 0.2% to 2,992.5p and Marston’s is down 1% to 126.1p.

Yesterday in the City

The FTSE 100 edged up 0.1% yesterday to 7,403.1pts to solidify Monday’s gains.

Greencore (GNC) ended the day down 3.4% at 239.9p after posting an improvement in underlying sales and profits after “fundamental reset” of the business following its exit from the US, though headline sales fell and slowed in the second half.

Compass Group (CPG), dropped 7.5% to 1,915p despite posting organic revenue growth of 6.4%, is above the group’s long term target range of 4-6%.

Other fallers yesterday included Glanbia (GLB), down 3.4% to €10.45 and Stock Spirits (STCK), down 3% to 190.8p.

Pets at Home surged 16.1% to 249p as its recovery continues after posting a strongly improved first half performance for the 28 week period to 10 October and announcing it is on track to deliver full year profits ahead of plan.

Other risers included McBride (MCB), up 5.7% to 83p, CAKE Box, up a further 4.6% 160.5p after Monday’s gains, TATE & Lyle (TATE), up 4.5% to 740.6p, Kerry Group (KYGA), up 3.9% to €115.80, Bakkavor, up 3.6% to 127.2p and Nichols (NICL), up 3.5% to 1,610p.

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