Soft drinks firm Britvic is to close two factories and a warehouse, placing up to 400 jobs in jeopardy, in a bid to slash costs by £30M by 2016.
Britvic's plans to cut 400 jobs with the closure of two factories and a warehouse are part of a bid to save £30M
The firm announced the decision as part of its interim financial results for the 28 weeks to April 14. Britvic’s chief executive Simon Litherland said: “We regret the potential loss of jobs caused by the change and are committed to supporting affected employees.”
He added: “The initiatives proposed along with the simplified organisational structure will, subject to appropriate consultation, lead to an overall reduction in headcount of between 10% and 15%.” The maker of Robinsons squash and R Whites lemonade employs about 3,300 people.
The factories earmarked for closure are at Chelmsford and Huddersfield – which produces Drench and Pennine Spring Water.
Factories earmarked for closure
The cost cutting plan also involves the closure of a warehouse in Belfast at the end of this year.
Britvic also planned to combine its GB and Ireland businesses, increased investment in procurement and product optimisation initiatives and invest £10M in the International business.
Its financial statement revealed strong profit growth with earnings before interest tax and amortisation (EBITA) of £53.6M up 27.6% on the same period of the previous year.
Underlying EBITA climbed by 17.9% when adjusted for one off and phasing items.
Group revenue was up 0.4%.
Litherland said:“Britvic has delivered strong first-half profit growth, a material improvement in cash flow and a reduction in net debt. This has been achieved by growing our average realised price, a continued focus on cost and the substantial progress we have made in improving the underlying strength of our business.”
He added that the firm’s new strategy would lead to “a step change in performance and improved returns for shareholders”.
Meanwhile, Britvic said it reserved judgement on any plan to merge with Irn-Bru maker AG Barr, pending the result of the Competition Commission judgement expected at the end of July.
Gerald Corbett, Britvic chairman, said: “The board will then [at the end of July] decide, in light of the Competition Commission’s decision, whether a transaction on the right terms with appropriate management and governance arrangements, can be consummated in the interests of shareholders.
“In the meantime, as we approach our busiest time of year, the management team, under our new chief executive, is totally focused on executing its new strategy, continuing the momentum established in the first half.”
‘A stand-alone entity’
Panmure Gordon analyst Damian McNeela said Britvic’s cost cutting plans were evidence that the firm sees “a strong future as a stand-alone entity”.
The analyst retained its hold recommendation on Britvic’s stock.
Investec analyst Nicola Mallard said the savings resulting from the factory and warehouse closures would “most likely have been part of the merger rationalisation”.
Mallard described the first half result as “very strong”.
Investec withheld a recommendation on Britvic’s stock pending an assessment of the implications for the firm’s longer term forecasts.
