A Non-Alcoholic Beverage Company With A Strong ROE And Dividend History

  • Feb 23, 2019 GMT
  • Team Kalkine
A Non-Alcoholic Beverage Company With A Strong ROE And Dividend History

Business Overview:

Britvic Plc is engaged in the manufacturing and distribution of soft drinks. It is a leading soft-drink company in Europe. Company’s brand portfolio comprising of Fruit Shoot, Robinsons, Tango, J20, Teisseire and Irish soft-drink brand MiWadi with PepsiCo brands under exclusive PepsiCo agreements like Pepsi, 7UP and Lipton Iced Tea. The Company is headquartered at Hemel Hempstead, United Kingdom.

Its areas of operations are categorised into six segments: GB Stills UK excluding Northern Ireland, GB Carbs- the UK excluding Northern Ireland, Ireland- Republic of Ireland and Northern Ireland, France, Brazil and International. 

Britvic’s 41 per cent of revenue comes from GB Carbs, 18.6 per cent from GB Stills, 17.9 per cent from France, 11.6 per cent from Ireland, 8 per cent from Brazil and 3 per cent from international, as per segment revenue contribution information provided in the Final results for FY2018.

Recent Developments

  • As on 29th November 2018, Britvic Plc reported its preliminary results for the 52 weeks ended 30th September 2018.
  • As on 29th November 2018, the board of directors of Britvic have recommended a final dividend of GBp 20.3 per share for FY18, with a total value of GBP 53.7m, which was 5.5% higher from the final dividend of GBP 19.3 in FY17.
  • As on 12th November 2018, Britvic appointed Sue Clark as Non-Executive Director of the Imperial Brand Plc.

Financial Highlights for FY18 (£, million)

(Source: Company filings, LSE)

Financial Highlights -FY18

  • Britvic’s reported revenue of £1,503.6 million for FY18 was 5.1 per cent higher against the FY17 revenue of £1,430.5 million.
  • Cost of Sales for FY18 was 46.6% of the group’s revenue at £702 million.
  • Company’s gross profit for FY18 was 5.0% higher at £6 million compared to the £763.3 million in FY17.
  • Company’s Operating profit was up by 1.9% at £1 million for the financial year 2018.
  • Financing cost reduced by 19 per cent to £3 million in FY18 as compared to £26.3 million reported last year.
  • Pre-tax profit was 5% higher at £8 million in FY18.
  • Net Profit (attributed to shareholders) was £1 million in FY18, rose 4.9% from £111.6 million in FY17.
  • Basic EPS stood at £4 pence for FY18 compared to £42.2 pence in FY17.

Ratios

(Source: Thomson Reuters)

  • Britvic’s gross margin for FY18 stood at 53.3%, a bit lower than the industry median.
  • Reported EBITDA Margin of 18.8% for FY18 was better than the previous financial year but considerably below the industry median of 23%.
  • Company Net margin was 7.8% significantly below the industry median of 13% in FY18.
  • Britvic’s return on equity (ROE) in FY18 was approximately double than the industry median of 17.2%, the company’s ROE stood at 32.7. However, ROE fell by 3.3% per cent during FY18 compared to 36% of ROE in FY17.
  • The Company looks attractive from the shareholder point of view as it has consistently delivered ROE of more than 30 per cent since last 3 years.
  • Britvic’s liquidity position in terms of current ratio was 0.93 in FY18, which was below the industry median of 1.21.
  • The Company is highly leveraged in terms of Asset/Equity ratio which stood at 4.67x, considerably higher against the sector median of 2.27x.

 

  • Debt-Equity ratio stood at 2.04x as compared to the industry average of 0.49x, which indicates Britvic is highly leveraged within the non-alcoholic beverages sector.
  • Company’s Asset turnover ratio stood at 0.89 during FY18, compared to the industry median of 0.55.

 Stock Performance – One Year

(Source: TR)

Stock Performance – Commentary

  • During last one-year stock have reached a 52w high of £921 and a 52w low of £5.
  • At the closing price of £0 (as on 21st February 2019), places it in line with its 52w High and 40.08% above its 52w low. It indicates that stock has the potential to register a new high.
  • One-year price return of the stock was 32.42%, and three-months return stood at 13.35%.
  • Stock’s Beta stood at 0.54 which makes Britvic shares less volatile against the benchmark.
  • At volume front, shares 5days average traded volume of 648,646.80 was 10.82 per cent below than its 30 days average traded volume of 727,317.00.
  • From a valuation standpoint, shares were trading at LTM PE (x) of 16.1x as compared to the industry median PE of 17.2x.
  • Total outstanding market capitalization was around £2.44 billion and a dividend yield of 3.06 per cent.

Conclusion

With stable revenue growth and a consistent return on equity (ROE) above 30 per cent in the last three years, makes Britvic a strong fundamental company. The market can keep a watch on Britvic stock going ahead.

 

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