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Research: Consumer
Britvic delivered an encouraging start to FY24 with robust Q124 results that showed good revenue progression, reflecting the strength of its brand portfolio. Group revenue growth of 8.1% was driven by positive trends in both price and volumes and was broad-based across Britvic’s geographies, continuing the positive momentum from FY23. Particularly strong growth in Brazil reflects the success of the Extra Power acquisition. Britvic reported robust trading over the important Christmas period, with revenue growth of 12.1% and volumes up 6.4% in December. The company continues to invest in its brands, including a refresh of Pepsi, and consequently is confident in achieving FY24 market expectations.
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Britvic |
Strong Christmas trading boosts Q124
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Consumer |
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26 January 2024 |
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Britvic delivered an encouraging start to FY24 with robust Q124 results that showed good revenue progression, reflecting the strength of its brand portfolio. Group revenue growth of 8.1% was driven by positive trends in both price and volumes and was broad-based across Britvic’s geographies, continuing the positive momentum from FY23. Particularly strong growth in Brazil reflects the success of the Extra Power acquisition. Britvic reported robust trading over the important Christmas period, with revenue growth of 12.1% and volumes up 6.4% in December. The company continues to invest in its brands, including a refresh of Pepsi, and consequently is confident in achieving FY24 market expectations.
Q124 results: Positive sales momentum
Britvic delivered robust group revenue growth of 8.1% on a constant currency basis and 7.9% on a reported basis to £443.5m. The strong sales momentum was driven by both positive price and volume movements, as volumes grew 1.7% y-o-y. Growth was seen across all Britvic’s geographies. Great Britain delivered a 6.9% increase in revenue, with gains in both the retail and hospitality channels. Revenue from Brazil rose 21.0% as it benefited from the Extra Power acquisition, which completed in October 2023. Revenue from other international markets was up 6.0%, with Ireland demonstrating particularly strong growth of 12.5%. France reported more modest growth of 1.1% as a decline in volumes was offset by price/mix in what continues to be a challenging market.
Brand investment to drive sustainable growth
Britvic’s strategy of delivering long-term sustainable growth is underpinned by the continued investment in its brand portfolio to drive innovation and appeal for consumers. Management plans to refresh the Pepsi brand for the first time in 14 years, while other brand activations and innovative marketing campaigns should continue to build on its strong brand loyalty and awareness. The two acquisitions made in FY23, Jimmy’s Iced Coffee in Great Britain and Extra Power in Brazil, provide Britvic with further opportunities in fast-growth categories. This strategy underpins management’s confidence in achieving market expectations for FY24.
Valuation: Remains at a discount
Britvic trades on a consensus FY24e P/E multiple of 14.2x, a c 11% discount to the UK beverages sector (excluding Fevertree) and a c 15% discount to AG Barr, which reflects that some of its brands are part-owned by third parties and its more leveraged balance sheet.
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Consensus estimates
Source: Refinitiv (priced at 26 January 2024) |
Britvic is a research client of Edison Investment Research Limited.
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Research: Industrials
Dowlais Group’s shares trade at a significant discount to our fair value. We have lowered our forecasts due to reduced expectations for automotive production and currency impact, but the key to unlocking value remains the group’s margin trajectory. We expect management to confirm that these targets (pre-central cost operating margin over 10% against 7.1% forecast for FY23) remain on track with the impending maiden set of results.