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
Bosses of collapsed banks should be sent to jail, banking standards commission tells George Osborne
Feat of engineering: Incredible photographs show construction beneath New York's Second Avenue
Brazil kicks off: World Cup excess draws hundreds of thousands to street protests
World news in pictures
Google challenges US surveillance gagging order
- 1 Diary of Second World War German teenager reveals young lives untroubled by Nazi Holocaust in wartime Berlin
- 2 Bosses of collapsed banks should be sent to jail, banking standards commission tells George Osborne
- 3 Breaking the Silence: In the reality of occupation, there are no Palestinian civilians – only potential terrorists
- 4 Uri Geller psychic spy? The spoon-bender's secret life as a Mossad and CIA agent revealed
- 5 Vice pulls 'breathtakingly tasteless' fashion shoot glorifying the suicides of famous female authors from Sylvia Plath to Virginia Woolf
iJobs Money & Business
£65000 - £85000 Per Annum: The Green Recruitment Company: The Green Recruitmen...
£400 per day: Orgtel: A top tier banking client urgently requires a Senior Bus...
£250 - £350 per day: Orgtel: Financial Crime Analyst,Midlands, Banking, AML/Sa...
£20,000 - £45,000 OTE: Co-Venture: Working for this company will give you a ch...