Currency in GBP
Last close As at 09/06/2023
GBP8.84
▲ −5.00 (−0.56%)
Market capitalisation
GBP2,283m
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 program of up to £75m over the next 12 months.
Britvic |
Resilient performance
Consumer |
ADR QuickView
17 May 2023 |
Underlying £ price converted at £1.25/US$. Share price graph ADR details
Business description
Bull
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: Metals & Mining
Endeavour Mining’s Q123 financial results were materially ahead of both the market and our expectations, on a headline and an underlying basis. Endeavour remains on track to achieve its FY23 production guidance of 1,325–1,425koz (with Q123 production of 301koz) at an AISC of $940–995/oz. Its performance is set to be weighted towards H223 as previously guided, with strong production at Ity and Wahgnion complementing opportunistic development across other assets in Q123. Endeavour continues to enjoy organic growth, and management is aiming to expand current projects (BIOX expansion and Lafigué) and delineate resources further, with a focus on key assets such as Tanda-Iguela (an updated resource estimate is expected in H223). In the light of Q123 results and recent moves in the gold price, we have upgraded our adjusted net attributable earnings forecasts for the full year by 14.6%. Looking ahead, MSCI has announced Endeavour will be added to its Global Standard UK Index on 31 May 2023, indicating this could represent up to 11.0m shares of inflows (roughly 4.5%) of Endeavour’s outstanding shares.
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