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Currency in GBP
Last close As at 09/06/2023
GBP8.84
▲ −5.00 (−0.56%)
Market capitalisation
GBP2,283m
Research: Consumer
During H122, Britvic witnessed double-digit revenue growth and volume and price increases in all business units and strong momentum across core brands. Growth continued in the at-home channels, while out-of-home continued to recover towards pre-pandemic levels. Immediate consumption levels are now ahead of where they were before the pandemic. Growth accelerated during the half year, with revenues up 16.5% in Q1 and 20.8% in Q2. In underlying terms, revenue was up 13.6% versus H120 (ie pre-pandemic), and during April momentum has continued to be positive. The company has successfully implemented both pricing and cost actions to mitigate some cost inflation, while continuing to rebuild investment and support the business. Management expects the current geopolitical situation to result in continued cost inflation and pressure on consumer spending, at least until 2023, although Britvic expects to continue to successfully navigate these headwinds.
Britvic |
Positive momentum
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Consumer |
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20 May 2022 |
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Bull
Bear
Analysts
Britvic is a research client of Edison Investment Research Limited |
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During H122, Britvic witnessed double-digit revenue growth and volume and price increases in all business units and strong momentum across core brands. Growth continued in the at-home channels, while out-of-home continued to recover towards pre-pandemic levels. Immediate consumption levels are now ahead of where they were before the pandemic. Growth accelerated during the half year, with revenues up 16.5% in Q1 and 20.8% in Q2. In underlying terms, revenue was up 13.6% versus H120 (ie pre-pandemic), and during April momentum has continued to be positive. The company has successfully implemented both pricing and cost actions to mitigate some cost inflation, while continuing to rebuild investment and support the business. Management expects the current geopolitical situation to result in continued cost inflation and pressure on consumer spending, at least until 2023, although Britvic expects to continue to successfully navigate these headwinds.
H122 results
Reported revenue was up 16.6% and 18.5% on a like-for-like and constant currency basis. Adjusted EBIT was up 20.7% on this comparable basis, and up 22.3% on a reported basis, with adjusted EBIT margin up 20bp to 10.2%. Adjusted EPS was up 27.8% to 19.4p. Adjusted net debt/EBITDA for H122 was 2.2x and is expected to decline further and remain in Britvic’s long-term range of 1.5–2.5x.
Long-term strategy intact but cost headwinds
Britvic continues to make progress against its strategic objective of sustainable growth. It is investing in its broad brand portfolio and its business capabilities, while embedding sustainable business practices into the way it operates and it is building growth opportunities by accessing new growth spaces. Cost inflation remains a concern across all consumer-facing businesses. While headwinds can be mitigated through a combination of agile supply chain, revenue management and cost-saving actions, the outlook for the consumer is likely to remain subdued.
Valuation
Britvic trades at a consensus FY22e P/E of 14.8x, a c 25% discount to the UK beverages sector (excluding Fever Tree) and a c 15% discount to AG Barr, reflecting its more geared balance sheet and the fact that some of its brands are part-owned by third parties. We believe those discounts should narrow over time with reducing balance sheet leverage although, in the shorter term, inflationary cost pressures remain the biggest risks for the whole sector.
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Consensus estimates
Source: Refinitiv, company data |
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Research: TMT
Claranova reported a revenue decline of 1% for the nine months to 31 March 2022 (9M22), reflecting a strong performance in Avanquest offset by a tougher period for PlanetArt. The slowdown in PlanetArt’s activities has pushed out the company’s target to achieve €700m in revenue from FY23 to FY24 but the EBITDA margin target of 10% for FY23 still stands. We have revised our forecasts to reflect H1 results and Q322 revenue; we cut our PlanetArt growth forecasts for Q422/FY23 and factor in a contribution from pdfforge from FY23, resulting in reduced EBITDA forecasts for both years.
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