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Britvic earnings, revenue to take 'material' hit from coronavirus

By Michele Maatouk

Date: Monday 23 Mar 2020

Britvic earnings, revenue to take 'material' hit from coronavirus

(Sharecast News) - Drinks company Britvic warned on Monday that 2020 earnings and revenue will take a "material" hit from the coronavirus.
The company said that prior to recent developments, trading in the quarter was broadly in line with its expectations. However, the closure of its trade outlets and restrictions on movement in each of its markets will "significantly" affect consumption both in outlet and on the go it said. As a result, it anticipates a "material" impact on revenue and earnings.

While it's too early to accurately determine the full effect of the situation, including the depth and duration of any restrictions, Britvic said it has modelled a number of possible outcomes. These include the impact of Out of Home closures, restrictions on movement, and differing potential supply and demand implications for its grocery business.

"All elements in our supply chain are currently working and while our modelling anticipates some minor potential disruption, it does not include a significant supply chain discontinuity, such as the enforced closure of all or a substantial part of any of our major production or distribution sites. Nor does it include significantly elevated levels of bad debt."

In the event that these conditions persist across its key markets of GB, Ireland, France and Brazil, the company's best estimate of the impact is a reduction in earnings before interest, tax and amortisation of between ?12m and ?18m per month. This includes a number of actions being taken to mitigate the profit impact.

The company, which was due to propose its interim dividend with results on 20 May, said it will determine at "the appropriate time" whether it's in the best interests of shareholders to recommend or postpone the dividend.

Chief executive officer Simon Litherland said: "Soft drinks has historically been a resilient category in any downturn. Britvic starts from a strong financial position and we are taking further action to protect our cashflow and profitability. Our brands' consumer appeal is enduring in good times and bad, and we are confident in our ability to bounce back strongly as normality returns. The long-term investment case for Britvic remains intact."


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