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Research: Consumer
Britvic’s interim results showcased a positive first half of FY24, with strong revenue growth across core brands and geographies. This was underpinned by a robust increase in volumes, reflecting product innovation and growth across its strategic pillars. Positive price/mix helped enable a 70bp improvement in margins. The enhanced profitability permitted a 16% increase in the interim dividend. Britvic continues to make strategic progress against the growth pillars of family favourite brands, Brazil and new growth areas. Management remains confident in the outlook, particularly with several key consumer activation events upcoming in the critical summer trading period. The company announced its third share buyback programme of up to £75m over the next 12 months.
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Britvic |
Buoyant volumes in H124
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Consumer |
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20 May 2024 |
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Britvic is a research client of Edison Investment Research Limited. |
Britvic’s interim results showcased a positive first half of FY24, with strong revenue growth across core brands and geographies. This was underpinned by a robust increase in volumes, reflecting product innovation and growth across its strategic pillars. Positive price/mix helped enable a 70bp improvement in margins. The enhanced profitability permitted a 16% increase in the interim dividend. Britvic continues to make strategic progress against the growth pillars of family favourite brands, Brazil and new growth areas. Management remains confident in the outlook, particularly with several key consumer activation events upcoming in the critical summer trading period. The company announced its third share buyback programme of up to £75m over the next 12 months.
H124 results
Britvic’s positive momentum continued in H124, with revenue up 11.2% at constant currency and 10.9% reported to £880.3m (H123: £794.0m). This reflected a beneficial price/mix and a 4.4% increase in volume growth in the period, which was particularly strong in Q2 at 7.4%. Adjusted EBIT was up 17.7% to £100.4m (H123: £85.3m), representing a 70bp improvement in the margin at 11.4%. Adjusted EPS grew 18.5% y-o-y to 27.0p (H123: 22.8p), leading to a 15.9% increase in the dividend to 9.5p (H123: 8.2p), among other factors. Leverage increased slightly to 2.3x (H123: 2.2x), reflecting the Brazil acquisition near the end of FY23.
Delivering against strategy
The company continues to make progress against its growth strategy, including 7.0% growth in its family favourite brands, 34.7% in Brazil and 63.5% in new growth areas including Plenish, Aqua Libra and London Essence. Investment in the brand portfolio, including innovation in product and a Pepsi refresh in the spring, helped drive volumes. Looking to H224, management’s confidence is underpinned by a number of consumer activation events across the summer, including the Champions League final and UEFA Euro 2024 competition. Its Healthier People, Healthier Planet strategy allows Britvic to embed sustainable business practices in the way it operates as it grows.
Valuation: Continued discount to peers
Britvic trades on a consensus FY24e P/E multiple of 15.3x, an 4.2% discount to the UK beverages sector (excluding Fevertree) and a 9.8% discount to AG Barr, which has narrowed since our last note. This could reflect the fact that some of its brands are third-party owned and its more leveraged balance sheet.
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Consensus estimates
Source: LSEG (priced at 20 May 2024) |
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Research: Investment Companies
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