With Ireland now representing a “harsh macro and consumer environment” and following a five per cent fall in revenue here, Britvic Licensed Wholesale, the Irish arm of Britvic, will undergo a restructuring, according Britvic’s annual report on the 53-week adjusted year to 3rd October.
According to the company, “Almost three years of challenging trading conditions and continuous price deflation have had an adverse impact on ARP, brand and channel mix and operating margins, this year being particularly difficult. Reflective of a rebased Irish business and market, management has commenced a review of the carrying value of Irish goodwill and other intangible assets and expects this review will result in an impairment charge at the 2010 year end. Britvic is also restructuring its Irish operations so as to benefit from a future return to favourable market conditions. Employee engagement on the proposals is in its early stages and an update on the financial implications will be provided in due course”.
The Irish operation “again contributed to material market declines this year” with on-trade MAT market volumes down by 11 per cent and values down 11.7 per cent here.
Despite a volume increase of 4.7 per cent, value in the grocery sector here fell 5.6 per cent with convenience store volumes flatlining and value falling by 8.9 per cent.
Overall volume was up 1.3 per cent at Britvic Licensed Wholesale but revenue declined 5.2 per cent to €204.5 million (£179 million).
The restructuring operation here should enable the company to better take advantage of any “future return to favourable market conditions” which remain “extremely difficult with no material signs of recovery in the soft drinks market” according to Britvic Chief Executive Paul Moody who added, "We are reviewing value and other assets and we expect this will result in an impairment charge at the 2010 year-end. We are hoping in the future Ireland will return to more stable market conditions and we are currently consulting with our people."
The decision to restructure is at the "early stages" and the company would not comment on any possible redundancies but according to Paul Moody, it’s very much about getting the Irish business in a "fit state to grow again" when the economy starts improving.
“Our action in Ireland will put our business model in optimal shape ahead of eventual market recovery,” he stated.
Revenue at Britvic Group overall was up 14.6 per cent to £1.139 billion.
With the acquisition of Britvic France completed on 28th May this year, Britvic will publish its preliminary results announcement on 2nd December.