Britvic shares battered by spiralling safety recall cost

 

Share in the drinks giant Britvic dived 13 per cent yesterday after it warned the cost of the safety recall of children's drink Robinsons Fruit Shoot will be much higher than it previously said.

Britvic admitted it will take a hit of £15m-£25m to pre-tax profits, a huge rise on the £1m to £5m estimate it first made.

City analysts took fright after it said: "It is difficult to be precise as to the full financial implications given the developing situation."

The broker Canaccord Genuity declared its fears of a "worst-case scenario" had been "realised".

The shares have now plunged by almost a quarter since the drama began on 3 July, wiping close to £200m off the company's stock market value, which is now around £615m.

Britvic began the product recall because of a design flaw on the bottle cap, which affects Robinsons Fruit Shoot and Fruit Shoot Hydro packs.

Its chief executive Paul Moody said a problem with the cap becoming detached had only occurred in a few instances but it was "the right decision" to make the recall.

But in a sign that it is turning into a crisis, the company warned: "Despite our ongoing investigations, we have been unable to speedily resolve the issues regarding the new-design cap."

The drinks firm, which is also behind brands such as Pepsi, Tango and 7up in the UK, will now resupply retailers with bottles of Fruit Shoot with a "proven" existing cap.

However, it will take six weeks to change production and begin re-stocking, and six months "to meet historic levels of demand".

Mr Moody said: "It is very disappointing and not what we would have wanted. But at the core, we believe we acted responsibly. The fundamental concern was about consumer safety.

"It's important for the consumer to understand, it is a package-cap issue and is not a product issue and not a brand issue."

However, this is not the only problem facing the company.

Britvic admitted poor weather and the weak UK economy have hit sales. Profits would be "at the bottom end of market expectations" even before the impact of the Fruit Shoot recall.

The broker Panmure Gordon said: "Whilst Britvic cannot control the weather, we believe the issue surrounding the product recall was avoidable."

Britvic shares ended down 40.1p to 260.1p

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