Britvic ups its game

Following the failed merger with AG Barr, Britvic has taken a long hard look at itself and changed for the better.

Having spent so much time and effort negotiating with Irn Bru maker AG Barr over a merger that didn’t happen, it was possible that Britvic could have taken its foot off the gas and drifted a little aimlessly. That has not been the case, however, as the breakdown in negotiations appears to have refocused management’s attention; the firm has made important steps to improving its exposure and profitability.

Britvic make a range of drinks in the UK such as Tango and Robinsons Squash, and also have a manufacturing agreement with PepsiCo to produce both Pepsi and 7 Up. In a reciprocal agreement PepsiCo are now to manufacture Fruit Shoots in America from 2014 for a 15-year term. The firm has also made moves to bolster its exposure in Europe – specifically Spain – and, from early 2014, India.

A combination of larger markets and improved profit margins, due to cost-cutting measures, has seen full-year operating profits jump almost 19% to £135 million from £112.7 million. If this sort of drive and improvement can be maintained, the shares could well outperform the very steady returns they have shown over the last couple of years.

Britvic chart

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts