Britvic Plc has posted a 31% drop in its annual profit after tax as the British soft drink company grappled with a new law in France and wrote down the value of some assets in the country.
The company, the brands of which include Tango, J2O, Fruit Shoot and Teisseire, said that its profit after tax dropped to £80.9 million for the year that ended on September 30 from £117.1 million last year as the company booked a revaluation charge in France.
In November, Britvic announced the sale of its French private label juice business, which is largely responsible for its underwhelming performance in France, as well as three manufacturing sites and its Fruité brand.
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Britvic's performance in France, where it has historically underperformed, was also dented by the introduction of the EGalim law.
The law was put in place to rebalance commercial relationships between smaller suppliers and retailers by regulating both promotional activity and margins.
"It has been a challenging year in France, with performance particularly disappointing in the second half of the year, as both the private label and branded business performed below expectations," Britvic said, adding that the introduction of the law had a "major impact".
Adjusted Operating Earnings
Adjusted operating earnings, however, rose 4.4% to £214.1 million, lifted by sales of Britvic's low sugar and fruit-based beverages.
A Shift Towards Healthier Alternatives
The company, which competes with A.G. Barr Plc and Fevertree Drinks Plc, has made a shift towards healthier alternatives after Britain levied a tax to curb sugar levels in beverages in 2018 in an attempt to fight obesity.
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