Input cost hikes hit Britvic

The company said that although the Irish soft drinks market remained challenging, the GB and French markets continued to demonstrate resilience. However, a trading statement went on, the pace of input-cost inflation in recent weeks had been unprecedented, leading to a revision to the full-year GB & Ireland input-cost inflation guidance to 9-11%. The escalation in input costs comes after the completion of this year's price-negotiation process, meaning that Britvic does not expect to be able to recover or mitigate in full the additional input-cost increases it now expect this year. "The input-cost inflation will impact the outcome for both the first half and full year, and means we do not now expect any operating-profit margin improvement in 2011, excluding the impact of France. Despite these headwinds, Britvic fully expects this year's operating profit performance to be materially ahead of the 53-week result reported for financial year 2010," the company concluded. Paul Moody, Chief Executive, commented: "Since our last update to the market we have witnessed a rapid and unprecedented uplift in the cost of key raw materials. This has been driven by a shortage of supply to the market, where, for example, we have seen prices for PET, derived from oil, surge by around 20% in the last month alone. We do, however, remain confident about the medium to long-term outlook for the business, and we look forward to providing more details on the latter at the annual investor seminar on 23rd March 2011."