Britvic shares fizzed up 10% today as the City warmed to some decent profits and plans for cost cuts of £30 million that will see the loss of hundreds of jobs.
The company has been in a state of limbo since February, when the Competition Commission put on hold its merger with AG Barr.
The watchdog is concerned that the deal would see the UK’s £9 billion soft-drinks market cut down to two main players, with only Coca-Cola as competition to the enlarged AG Barr. It will report back at the end of July.
Today Britvic argued that it could thrive even if this deal is blocked.Profit for the half year to April 14 was up more than 50% to £37.5 milion, well ahead of City forecasts, as new chief executive Simon Litherland made his case. There will be an increased investment in the international arm, an overhaul of the management structure and up to 400 job cuts as two factories and one warehouse are closed.
Broker Canaccord Genuity said: “Much of this is needed considering the sharp volume declines the group has suffered.”
Panmure Gordon said in a note: “The company...has announced a number of major initiatives targeting cost savings of £30 million by 2016, which compares with the £40 million of synergies under the proposed merger with AG Barr.
‘This provides the clearest indication that Britvic sees a strong future as a stand-alone entity.”
Britvic said full-year profits will be at the top end of City expectations, which are for between £125 million and £131 million.
Shares rose 46.3p to 518.5p.
