Currency in GBP
Last close As at 26/05/2023
GBP9.17
▲ 3.50 (0.38%)
Market capitalisation
GBP2,318m
Research: Consumer
Britvic’s H1 results have demonstrated the business’s resilience, with growth in underlying revenue and EBIT margin, and only a modest volume decline during H1. Britvic has continued to execute pricing actions successfully throughout the period, with management also helping to mitigate inflationary pressures through cost efficiencies. Britvic’s brand performance remains strong, and the business continues to invest in growth capacity. The company has announced a further share buyback programme of up to £75m over the next 12 months.
Britvic |
Resilient performance
Consumer |
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16 May 2023 |
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Business description
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Bear
Analysts
Britvic is a research client of Edison Investment Research Limited |
Britvic’s H1 results have demonstrated the business’s resilience, with growth in underlying revenue and EBIT margin, and only a modest volume decline during H1. Britvic has continued to execute pricing actions successfully throughout the period, with management also helping to mitigate inflationary pressures through cost efficiencies. Britvic’s brand performance remains strong, and the business continues to invest in growth capacity. The company has announced a further share buyback programme of up to £75m over the next 12 months.
H123 results
Revenue increased 7.9% at constant currency to £794m (+10.4% on a reported basis). Adjusted EBIT rose 16.7% to £85.3m on a comparable basis (+16.1% on a reported basis), with adjusted EBIT margin up 80bp to 10.7%. Adjusted EPS was up 17.5% to 22.8p, with the interim dividend up 5.1% to 8.2p. Adjusted net debt/EBITDA was 2.2x, in line with H122.
Delivering the strategy
Britvic continues to deliver 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 continuing to access new growth spaces. The outlook for the consumer is starting to improve, although consumer confidence remains subdued. Trading in the key markets of Great Britain, Brazil and Ireland was strong, while France remained difficult with price increases going through later and which will not be sufficient to cover inflation.
Valuation
Britvic trades at a consensus FY24e P/E of 15.0x, a c 20% discount to the UK beverages sector (excluding FeverTree) and a c 10% 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 and a subdued consumer environment remain the biggest risks for the whole sector.
Consensus estimates
Source: Refinitiv (priced at 15 May 2023) |
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Research: Healthcare
Newron has presented new efficacy data from its Phase II evenamide trial (study 014/015) at the CINP World Congress of Neuropsychopharmacology and the 2023 Congress of the Schizophrenia International Research Society. These data, from the first 100 patients at the one-year timepoint, indicate significant and clinically important results, with continuous improvements across the Positive and Negative Syndrome Scale (PANSS) and the Clinical Global Impression of Change (CGI-C), Severity of Illness (CGI-S) and Strauss-Carpenter Level of Functioning (LOF) efficacy scales. While we anticipate full one-year results from the evenamide extension trial (study 015) in Q124, the company plans to initiate a potentially pivotal multinational Phase III trial (study 003) in treatment-resistant schizophrenia (TRS) patients in H223, which in our view, represents an important catalyst.
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