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Britvic Plc Forecasts 2014 Profits Up At Least 10%

The shares of  Motley Fool Share Advisor favourite Britvic (LSE: BVIC) surged 26p to 634p during early trade this morning after the drinks group said its 2014 profits could improve by at least 10%.

Britvic, which owns brands such as Robinson’s, Tango and Fruit Shoot, said operating profits for next year should come in between £148m and £156m. This morning’s 2013 results showed a £135m operating profit, indicating potential profit growth of up to 16%.

The annual figures from the FTSE 250 member also showed group revenue advancing 5.2% to £1.3bn and margins improving from 9.2% to 10.4%. Britvic claimed underlying free cash flow surged 67% to £103m and helped to reduce net debt by £44m to £402m.

Adjusted earnings gained 29% to 35.2p per share while the dividend was lifted 4% to 18.4p per share.

Simon Litherland, the chief executive officer of Britvic, said:

We have delivered a strong financial performance in a year of significant change for our business.  We have grown revenue and price in all of our business units and gained market value share.

Mr Litherland also said he expected the group to deliver £30m per annum of cost savings from 2016 and revealed a new 15-year bottling arrangement with PepsiCo.

Based on this morning’s results and price reaction, Britvic’s shares may trade on a P/E of 18 and offer a yield of 2.9%.

The shares have been wonderful performers during the last 18 months, having risen 132% since their mid-2012 low of 273p.

Of course, whether that rally, the current valuation, today's annual figures as well as the wider prospects for soft drinks all combine to make Britvic a 'buy' right now is something only you can decide.

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> Maynard does not own any share mentioned in this article. The Motley Fool has recommended shares in Britvic.