"The potential financial impact of the recall is being analysed, but at this very early stage it is anticipated that there will be a limited cost estimated at between £1M and £5M to profits before tax in the current financial year,” said the company.
Britvic is recalling all Robinsons Fruit Shoot and Fruit Shoot Hydro packs, that feature the new design cap, due to “a packaging safety issue”.
The firm said the recall was a precautionary measure after it had detected “a small number” of damaged caps.
Safety risk
A statement on Britvic’s website warned the caps had been damaged during the manufacturing process. “This is fundamentally a quality issue but as the damaged caps may become fully or partially detached, we recognise that there could potentially be a very small safety risk,” it said.
The problem concerns the cap only and not the soft drink, it added.
Investigations were continuing to identify the cause of the problem and find a solution, said Britvic.
Fruit Shoot My-5 is not being recalled. No other Robinsons products are affected.
City analyst with Panmure Gordon Damian McNeela noted that the recall came after a wet June, which was likely to have dampened sales. “Soft drink volume data for June is not yet available but April saw 11% volume declines, May’s volumes gained 4% but were driven by heavy promotional activity.
Promotional activity
“We expect June’s volumes to be down by high single digits, and believe that, even if the weather improves over the remaining summer months, promotional activity will remain high.”
Last month was the wettest June on record. Also, the period from April 1 to June 30 was the wettest second quarter on record.
Panmure has cut its forecast of profit before tax and amortisation for the financial year 2012 by £6M to £105.1M. That included £3M for the product recall and £3M for impact of poor weather.
McNeela concluded: “Given the challenging UK and Irish consumer markets, we maintain our hold recommendation [on Britvic’s shares] and lower our price target to 350p.”