Currency in GBP
Last close As at 03/02/2023
GBP7.79
▲ 5.50 (0.71%)
Market capitalisation
GBP2,019m
Research: Consumer
Britvic reported strong double-digit revenue growth across all business units in FY22, reflecting brand resilience despite significant headwinds. Trading benefited from a full year with no COVID-19-related restrictions and hot weather during the summer. Performance was boosted by balanced growth in volume and price, as management mitigated the significant cost inflation in the year through price rises and efficiency initiatives. As such, adjusted EBIT was up 17% while adjusted EPS grew 29.3%. The dividend per share increased 19.8% to 29p. Despite the more challenging macroeconomic environment, management notes no slowdown in consumer demand, with current trading in line with expectations. Although current headwinds on costs and consumer spend are expected to persist into FY23, management believes it is well positioned to navigate these challenges successfully.
Britvic |
Strong growth despite headwinds
Consumer |
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30 November 2022 |
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Business description
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Analysts
Britvic is a research client of Edison Investment Research Limited |
Britvic reported strong double-digit revenue growth across all business units in FY22, reflecting brand resilience despite significant headwinds. Trading benefited from a full year with no COVID-19-related restrictions and hot weather during the summer. Performance was boosted by balanced growth in volume and price, as management mitigated the significant cost inflation in the year through price rises and efficiency initiatives. As such, adjusted EBIT was up 17% while adjusted EPS grew 29.3%. The dividend per share increased 19.8% to 29p. Despite the more challenging macroeconomic environment, management notes no slowdown in consumer demand, with current trading in line with expectations. Although current headwinds on costs and consumer spend are expected to persist into FY23, management believes it is well positioned to navigate these challenges successfully.
FY22 results
Revenue grew 15.2% on a reported basis and 15.5% on a like-for-like and constant currency basis to £1.62bn (FY21: £1.41bn), ahead of consensus expectations (Refinitiv: £1.59bn). Adjusted EBIT grew 17% while reported EBIT was up 26.2%, at an adjusted margin of 12.7% (reported 11.9%). Adjusted EPS was up 29.3% to 57.3p. Strong free cash flow of £129m enabled the lowering of adjusted net debt to £475m (FY21: £489m). Adjusted net debt to EBITDA fell to 1.9x (FY21: 2.1x).
Deliver on strategy as cost headwinds are managed
Britvic continues to deliver against its strategic objective of sustainable growth. It is investing in its brand portfolio and supply chain, while making strong progress on sustainability targets and developing growth opportunities in new areas. Although input cost pressures are expected to remain elevated in FY23, management has greater cost visibility given the hedging strategy, which has secured prices, although at a higher level than FY22. Britvic will also use revenue management and efficiency savings to maximise pricing.
Valuation
Britvic trades at a consensus FY23e P/E of 14.3x, a c 17% discount to the UK beverages sector (excluding FeverTree) and a c 11% 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 weak consumer spend remain the biggest risks for the whole sector.
Consensus estimates
Source: Refinitiv (30 November 2022) |
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Research: TMT
On a pro forma basis, Induction Healthcare’s FY22 results were in line with our forecasts and market consensus, with revenues up 8x y-o-y to £12.1m and a move to adjusted EBITDA break-even. Contract renewals for Attend Anywhere with the NHS at the end of FY22 saw higher retention rates than management expected, as well as some increases in contract value and length. These improvements drove an increase in the group’s annual recurring revenue (ARR) to £13.5m and help de-risk its recurring revenues moving forward as most were signed on a two- or three-year term. We believe the share price does not factor in this robust revenue visibility, with the group trading at an average 57% discount to its healthcare technology peers on EV/sales across FY23 and FY24.
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