CO2 shortage takes fizz out of Britvic’s sparkling performance

BRITVIC is due to miss out on a warm weather windfall after counting the cost of the recent CO2 crisis.

City analysts would have expected a chunky uplift to third-quarter profits tomorrow after one of the hottest summers on record. But CO2 shortages last month meant Britvic was unable to capitalise on quenching the thirst of the parched public.

Britvic was one of a number of drinks manufacturers forced into rationing supply and the usual summer promotions were culled, experts said.

Jefferies analyst Edward Mundy said carbonated drinks represent almost half (46pc) of Britvic’s profits, adding: “While we believe that there have been no stock-outs from CO2 shortages, it is likely that promotional plans were adjusted to reflect supply constraints during a period of CO2 shortages during the third quarter.

“In the absence of CO2 shortages, it is likely that the company would have been facing upgrades, we believe, with a good summer [would be] worth around £5m.” Goodbody food and beverage analyst Patrick Higgins said Britvic would have otherwise have been “a beneficiary of the good summer weather”.

“There has been some rationing by grocers … and promotions were curtailed. It is difficult to separate out the financial impact [of CO2]. But I am fairly comfortable they will be able to hit my full-year figures,” he said. Like other sugary drinks manufacturers, Britvic worked hard to soften the blow of this year’s introduction of the soft drinks industry levy.

Some 94pc of its owned brands and 74pc of its overall portfolio were either under or exempt from the sugar tax

Against the backdrop of rising demand from pubs and bars showing the World Cup, CO2 manufacturers cut production following extended maintenance cycles to plants.

Richard Felton, a Morgan Stanley analyst, said: “Similarly to England fans, Britvic shareholders might be left wondering ‘what might have been’.”

In the 28 weeks to April 15, Britvic’s last update to markets, the company generated £733.2m of revenue and £41.8m of profit before tax.