Drinks firm laments cost of materials

BRITVIC Plc, the maker of Ballygowan, fell the most in almost five years after saying the price of key raw materials is rising at an “unprecedented” pace and operating margins won’t improve this year.

Britvic fell 49 pence, or 12%, to 369 pence at the 4.30pm close in London, the biggest one-day decline since March 2, 2006.

“The escalation in input costs comes after the completion of this year’s price negotiation process, meaning that we do not expect to be able to recover or mitigate in full the additional input-cost increases we expect this year,” the company said in a statement.

The rise “means we do not now expect any operating profit margin improvement in 2011”.

Britvic estimates that input cost inflation will rise to between 9% and 11% this year as the price of oil, sugar and steel increase, the Chelmsford, England-based company said.

Britvic, which uses an oil-derived product for its plastic bottles and steel for its cans, previously estimated a rise of between 5% and 6%.

“These developments have occurred in the past few weeks,” chief executive Paul Moody said in a telephone interview.

“We do remain confident that our 2011 profit will be materially ahead of 2010.

“Our trading in all our business units is strong,” added Mr Moody.