Britvic hit by rising tide of costs

City A.M. Reporter
SOFT drinks maker Britvic yesterday forecast higher raw material inflation than it previously expected as the cost of products it uses to make soft drinks, cans and bottles rises, though it still expects to post a higher profit this year.

Shares in Britvic, which have lost about 14 per cent over the past three months, closed 11.7 per cent lower yesterday at 369p.

Britvic, whose brands include Robinsons, Tango, J2O and Fruit Shoot, said input-cost inflation for Britain and Ireland would be 9 to 11 per cent, reflecting price increases of steel and sugar.

It previously expected inflation to be five to six per cent. Britain’s second biggest soft drinks maker behind Coca-Cola Enterprises said inflation would impact both its half-year and full-year results and, warned that it does not expect an improvement in operating profit margins in 2011.

“What we had previously guided was on an operating margin improvement, but clearly with the impact of the increased raw materials we do not believe that operating margin percentage will move,” Britvic chief executive Paul Moody said.

Britvic said yesterday that its operating profit for 2011 should rise despite higher inflation because of strong performance during the second quarter.