Sports-cap problems leave Britvic with £25m headache
SOFT drinks manufacturer Britvic – which has operations in Rugby and Solihull -said today it is likely to take a hit of between £15 to £25m due to its having to recall all its all Robinsons Fruit Shoot and Fruit Shoot Hydro packs featuring a new design cap.
The company issued a safety recall last week due to concerns over the design of new sports cap on bottles of its best-selling brands.
It said today that despite ongoing investigations it had been unable to resolve the issues in the short term and had therefore decided to re-supply with an alternative, proven sports cap and as a result, it would re-start deliveries to customers in six weeks, with a gradual increase to enable it met levels of demand within six months.
In a statement, Britvic said: “It is difficult to be precise as to the full financial implications given the developing situation.
“In addition to the previously guided cost of the consumer recall, the now extended period of absence from the market along with a restriction on available cap production capacity of up to six months results in a material financial change.
“We believe this will now have an impact on the group profit before tax in the region of £15m to £25m across the current and next financial year. This includes an anticipated impact in 2013 financial year of between £5m and £7m.”
It also forecast an additional negative impact on working capital, which will reverse in 2013.
It stressed no other Robinsons products were affected by the problem.
The situation is a further blow to the business, which said it had already been hit by poor trading conditions in May due to the adverse weather and weak consumer sentiment.
“Since then trading conditions have not improved and the group now expects to deliver a result for the current financial year that is at the bottom end of market expectations, before taking account of the impact of the Fruit Shoot recall,” it added.
The group will update further in its Q3 management statement on July 19.
