Statement re impact of the Coronavirus (COVID-19)

RNS Number : 1177H
Britvic plc
23 March 2020
 

Britvic plc

LEI: 635400L3NVMYD4BVCI53  

23 March 2020, 7am.

 

Britvic plc provides the following update on the impact of the Coronavirus (COVID-19).

This announcement contains inside information.

The welfare of our people remains paramount. Where possible our people are working from home, and where this is not possible in our supply chain and transactional services teams, we are doing our utmost to distance and protect our employees. We are not surprised by, but remain enormously grateful for and proud of, the dedication being shown by all our colleagues at this time.

Prior to the recent developments, trading in the quarter was broadly in line with our expectations. The recently announced closure of on trade outlets and restrictions in people movement in each of our markets will however significantly affect consumption both in outlet and on the go. We therefore anticipate a material impact to the company's revenue and earnings in 2020.

While it is too soon to accurately determine the full effects of the rapidly evolving situation, including the depth and duration of any necessary restrictions, we have 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 our 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.

Based on our modelling work to date, in the event that these conditions persist   across our key markets of GB, Ireland, France and Brazil, our best estimate of the impact for the Group is a reduction in EBITA of between £12m and £18m per calendar month.

 

The above figures include a number of actions we are taking to mitigate the profit impact through cost control and reduced discretionary spend across our business, including A&P. We are also taking further actions to ensure the security of our cashflow, including the deferral of capital expenditure and closely managing our working capital, while also seeking to give appropriate support to customers and suppliers.

 

Britvic starts from a strong financial position, as a highly cash generative business with a robust balance sheet. Our Net Debt to EBITDA at the end of FY19 was 2.1x. We have an open and strong relationship with a broad and supportive banking group, and we are a long-standing issuer in the private placement market.  This combination provides access to c.£1bn of facilities, which will help us to absorb the impacts of the scenarios outlined above. 

 

We recently successfully refinanced our £400m revolving credit facility up to 2025, with the potential to extend the maturity to 2027 with lender consent. There is also an accordion mechanism in place to increase the RCF size by up to another £200m (again with lender consent). In addition we have access to £600m of private placement notes, of which we recently refinanced £150m. Covenants are set at 3.5x Net Debt to EBITDA and 3x EBITDA to Net Interest Expense (which was at a comfortable 14x at the end of FY19).

 

In addition, we will explore the newly announced Covid Commercial Financing Facility (CCFF) from the Bank of England. Finally, we remain fully engaged with all of our lenders, and should we require further headroom or flexibility, we are confident we could achieve this.

 

Our interim dividend is due to be proposed in our interim results on May 20. While all the above gives us confidence in our funding arrangements, the uncertainty that surrounds us and pace of change means that we will reflect, at the appropriate time, with the best available up to date information, whether it is in our shareholders' best interests for us to recommend or postpone the interim dividend.

 

In addition to all our business continuity work, we also remain focused on maintaining a full state of readiness to ensure that Britvic can resume strong trading once the crisis passes and normality returns.

 

Simon Litherland, CEO, commented:

 

"I have spoken many times about Britvic's resilience in the face of tough external circumstances. Never has that been tested as much as is happening now. I am always proud of the way our people respond to a challenge and once again they are delivering beyond my expectations.

 

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.

 

In the short term our priorities remain the welfare of our people, maintaining the availability of our products to consumers through our diverse customer base, and sound financial management of the business."

 

Clare Thomas

Company Secretary

 

 

For further information please contact:

Investors:

Steve Nightingale (Director of Investor Relations)   +44 (0) 7808 097784

Media:

Kathryn Partridge (Director of Corporate Affairs)  +44 (0) 7803 854229

Stephanie MacDuff Duncan   +44 (0) 7808 097680

Stephen Malthouse (Headland)  +44 (0) 203 8054822

Notes to editors

About Britvic

Britvic is one of the leading branded soft drinks businesses in Europe. The company combines its own leading brand portfolio including Fruit Shoot, Robinsons, Tango, J2O, London Essence, Teisseire and MiWadi with PepsiCo brands such as Pepsi, 7UP, Arto LIFEWTR and Lipton Ice Tea which Britvic produces and sells in GB and Ireland under exclusive PepsiCo agreements. Britvic is the largest supplier of branded still soft drinks in Great Britain ("GB") and the number two supplier of branded carbonated soft drinks in GB. Britvic is an industry leader in the island of Ireland with brands such as MiWadi and Ballygowan, in France with brands such as Teisseire, Pressade and Moulin de Valdonne and in Brazil with Maguary, Bela Ischia and Dafruta. Britvic is growing its reach into other territories through franchising, export and licensing. Britvic's management team has successfully developed the business through a clear strategy of organic growth and international expansion based on creating and building scale brands. Britvic is listed on the London Stock Exchange under the code BVIC and is a constituent of the FTSE250 index.

 Cautionary note regarding forward-looking statements

This announcement includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Except as required by the Listing Rules and applicable law, Britvic undertakes no obligation to update or change any forward-looking statements to reflect events occurring after the date such statements are published.

Next scheduled announcement

Britvic will publish its Interim results on 20 May 2020.

 


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