Falling private label volumes at Refresco Gerber (RFRG) have pushed down sales 2.3% in the first quarter as the group turned its focus to co-packing.

Shares in the group have slumped 6% to €15.32 so far today on the back of the disappointing trading update.The Dutch soft drinks and fruit juice bottler blamed soft Easter sales and the commercial decision to let go of some lower margin contracts in water and carbonated soft drinks, specifically in Germany and Poland, for the 7.1% slump in private label volumes to 1 billion litres.

A 10.8% rise in co-packing volumes to 282.9 million litres offset some of the decline but overall volumes still fell by 3.8% to 1.3 billion litres.

Revenues at Refresco, which bottles drinks for the likes of Innocent and Del Monte and supplies private label products for retail customers such as Tesco, slipped to €447.9m, compared with €458.2m in the first three months of 2015.

Adjusted EBITDA fell €2.9m to €34.2m year-on-year, but the business moved to a net profit of €5.7m from a loss of €15.3m in the first quarter of 2015 when it was hit with a one-off charge of €20m related to its flotation on the Amsterdam stock market.

CEO Hans Roelofs said: “Our strategic focus to grow co-packing relative to private label is paying off and I am pleased that this quarter we reported double-digit growth in this category. The development of private label unfortunately did not meet expectations with volumes declining, partly due to very soft sales in the Easter period.

“Despite the challenging conditions in the first quarter we were able to report an increase in net profit thanks to the refinancing in June 2015 and no negative impact of exceptional items.”

Refresco confirmed the mid-term guidance of low to mid-single digit organic volume growth for 2016, but added that it was likely to be closer to the lower end of the range.

During the first quarter, the group revealed its first acquisition since the IPO with the €72m deal to buy Dutch beverage manufacturer DIS. Refresco added that the deal had completed this week.

“We remain focused on our buy and build strategy and continue to work with a well-filled pipeline of M&A opportunities,” Roelofs said.

The bottler also built on its footprint in the German soft drinks and fruit juices market in the first quarter with an agreement to buy the PepsiCo’s bottling plant in Hamburg.

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