Britvic Ireland increases its dividend 15% in a ‘pretty challenged’ market

BRITVIC Ireland said revenues have been hit by the recession but it is still encouraged by recent sales.

The company yesterday said annual revenues in the year to the end of September are up more than 6% to £200.7m (€238m).

However, Britvic believes the effects of the Irish recession has hit both the take-home and pub markets although business fundamentals remain strong.

The company said it delivered a robust performance in the year with earnings before tax and interest amounting to €21m.

The positive earnings report from Britvic, in which it also raised its annual dividend 15%, pushed the stock up the most in more than a month. The company said it is well placed to capture future growth.

Chief executive Paul Moody said the company’s brands continue to perform “very strongly” across all categories. Group profit before tax in the year was up 14.4% to £70.1m.

Analysts said Britvic’s product mix has an advantage in a recession because it sells squash, a inexpensive fruit-drink concentrate popular in Britain. In Ireland, Robinsons takes Britvic Ireland squash share to over 70%.

Overall sales advanced 29% last year, helped by the purchase of C&C’s soft-drinks unit.

“Britvic continues to show resilience because it has low exposure to expensive smoothies and bottled water, but has exposure to squash, which benefits from down trading,” UBS analysts Jason DeRise and Melissa Earlam said. “We view the dividend as safe.”

Britvic incurred one-time pretax costs of £18.3m, partly related to the closure of its Cork factory and the termination of a third-party distribution agreement.

Sales rose to £926.5m.

There may be opportunities for acquisitions, though “the economic and financial markets are pretty challenged,” at the moment, Mr Moody said. The soft-drinks market remains “difficult” and Britvic is “cautious,” the company said.

Britvic has begun to talk with its banks on 2010 refinancing, Moody added.

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