DRINKS manufacturer Britvic has rebounded from the failed merger with AG Barr by posting a solid hike in profits and announcing a US expansion for its Fruit Shoot brand.
The group, which also makes drinks such as Robinsons squash and Tango, saw revenue grow 4.4% from £1.26 billion to more than £1.32bn in the 52 weeks to September 29 this year with operating profit rising 18.8% to £135 million helped by the warm summer.
Volumes fell by 0.4% as a result of lower Fruit Shoot sales in the early part of the year as a result of the aftermath of a product recall related to problems with the caps on bottles.
Britvic said it booked £9.6m of exceptional costs, described as advisory fees, for the aborted tie-up with AG Barr.
An amended all-share proposal from the Irn-Bru maker, led by chief executive Roger White, was rejected in July this year. That came after competition watchdogs launched a probe into the initial deal less than two weeks before it was scheduled to complete in February.
Although the competition hurdles were cleared after the inquiry the additional months allowed Britvic, which had been struggling with a falling share price and costs associated with the recall of faulty Fruit Shoot bottles, time to regroup and allow chairman Gerald Corbett to get a new chief executive in place.
Yesterday, Simon Litherland, who became chief executive in February, confirmed the turnaround plan he designed is on track and expected to deliver £30m of annual cost savings by 2016.
He said: "We have delivered a strong financial performance in a year of significant change for our business.
"We have grown revenue and price in all of our business units and gained market value share, resulting in operating profit growth in excess of 18%."
Profit after tax and exceptional items rose 6.5% on a constant currency basis from £57.4m to £61.9m.
Mr Litherland said the 15-year manufacturing and distribution deal with PepsiCo Americas Beverages is "further evidence of the growth opportunities that exist for our brands internationally".
The agreement will see the Fruit Shoot drink rolled out to another nine states in the US bringing the total to 42.
A trial of Robinsons squash is also taking place in one state.
Britvic has already expanded in Europe with the launch of Fruit Shoot in Spain, has plans to move into India in mid-2014 through a partnership with the Narang Group and is believed to be in early talks about expanding into other new markets.
Mr Litherland said: "While we anticipate that the consumer environment will remain challenging in 2014, trading in the new financial year is slightly ahead of a strong first quarter performance last year and we are confident of delivering [earnings before interest and tax] in the range of £148m to £156m for the full year."
Shares hit a high of 641.5p in early trading on Tuesday before falling back to close the day up 17p, or 2.8%, to 624p.
Damian McNeela, from Panmure Gordon, said the Britvic results were better than expected and predicted further progress as cost savings start to come through. He added: "We reiterate our buy recommendation and 660p target price [for the shares]."
Wayne Brown, from Canaccord Genuity, said: "We remain cautious due to the company's track record on large capital projects but acknowledge the positive developments made over the last year.
"We reiterate our hold recommendation and target price of 550p."
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