It's Wimbledon and the sun is shining and Britvic (LON:BVIC) appears to be doing very nicely 

This £1.1bn UK mid cap is outperforming its peers and recently announced a step-up in its international expansion with a substantial acquisition that was well received by the market. The long term partnership with a major international sector peer means that it looks extremely well placed

 

 

THE BUSINESS

Britvic (LON:BVIC) is the second-biggest supplier of carbonated drinks by sales in the U.K. behind Coca-Cola Co. (NYSE:KO) In addition to producing its own brands such as Britvic, Robinson's, Tango, RWhites, Purdeys  the group produces, markets and distributes other soft drinks including Pepsi and 7UP under an exclusive deal with PepsiCo Inc. until 2023. Britvic evolved when Bass, Whitbread and Allied Breweries merged their respective soft drinks businesses.

It claims a No 1 position in UK Still, UK Licensed On Premise and No 2 in the UK in carbonates and take home. The group has an established bottling relationship with Pepsico

Channels to market in the UK are as follows:

  • Grocery - total retail value £4.4bn, Britvic share 12.6%, No 2 supplier
  • Licensed - total retail value £2.4bn, Britvic share 47.5%, No 1 supplier
  • Impulse - total retail value £1.8bn, Britvic share 9.9%, No 3 supplier
  • Food Service - total retail value £6bn, Britvic share 7%, No 3 supplier

Interim sales for the 28 weeks to 11th April were:

  • GB Carbonates £227m (+11%)
  • GB Still £178m (+5.5%)
  • Ireland £90m (-11.3%)
  • International £11m (+20%) – pre recent Fruite acquisition.

PEER GROUP - soft drink beverage companies:

  • CocaCola @$51.31 Mkt cap $116bn: PE 14.98x Dec 2010 (13.8x 2011)
  • Pepsico @$61.89 Mkt cap $98bn: PE 14.9x Dec 2010 (13.4x 2011)
  • DR Pepper Snapple @$37.66 Mkt cap $9bn: PE 15.6x Dec 2010 (13.6x 2011)
  • A.G.Barr @1058p Mkt cap £411m: PE 19x for Jan 2011 (17.8x Jan 2012)
  • Nichols @400p Mkt cap £146m: PE 15.5x Dec 2010 (14.8x Dec 2011)

SOME TRADE THOUGHTS

  • Valuation/growth prospects relative to peers.
  • 17th May 20120 announced 28% jump in first-half operating profit and group operating profit margin improvement of 150bps to 8.1%. Poor weather in the second quarter (winter period) and tough comparisons from last year should result in a slowdown in sales growth from the 11% posted in the first quarter. Volume and pricing momentum should continue to push the top line however, especially in…

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