Robinsons Fruit Shoot recall to cost Britvic £25m
Wednesday 11 July 2012
The maker of Robinsons Fruit Shoot today warned the profit impact of recalling packs with a new cap design is set to rise to up to £25 million.
Britvic recalled all bottles of the children's drink and spin-off Fruit Shoot Hydro featuring the new design earlier this month as a precautionary measure.
Britvic today admitted it failed to speedily resolve the problem and it will take six weeks to resume production with a new type of cap, while it will take up to six months to fully satisfy previous levels of demand.
As a result, it predicts the episode will wipe between £15 million and £25 million from profits over this financial year and next, in a dramatic increase of its previous estimate of up to £5 million in the year to October.
Shares fell 11 per cent today.
The problems struck after Britvic introduced an easy to open sports cap but found a small number may become fully or partially detached.
It has decided to use an alternative sports cap, which is already in use on the market, in the short-term.
Britvic's website claims Fruit Shoot is the number one selling "children's fast-moving consumer goods brand", worth £96 million.
Fruit Shoot Hydro, a fruit-flavoured mineral water that is free of sugar and artificial colours and flavourings aimed at children aimed seven to 11, was launched last year in a £2.5 million marketing campaign.
The recall does not apply to the Fruit Shoot My-5 and other Robinsons products were not affected.
The Chelmsford-based company, which employs 3,500 staff worldwide, said its poor run of trading continued in recent weeks as weak consumer sentiment and the dire weather hits sales.
The group, which also makes Tango and J20 and owns the licence to make Pepsi and 7Up, warned that its results for the current financial year would be at the bottom end of City expectations, even before the impact of Fruit Shoot recall.
Wayne Brown, an analyst at Canaccord Genuity, cut his forecast for underlying earnings for the current year to £150.9 million from £182 million. That would represent a 19 per cent fall on the previous year.
He also thinks the firm will reduce dividend payments to shareholders.
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