Bottling firm Refresco has posted a 20% increase in adjusted EBITDA in the first quarter of its financial year, to €98 million, while total volumes grew to 2.76 billion litres in the period, a 7.1% increase.
Volumes in its North America business saw 15.9% growth in the period, with both retailer brands and contract manufacturing up, while volumes in Europe, albeit more erratic, also saw a marginal increase.
Growth Drivers
Volume growth in the period was driven both by customer stockpiling of products, as well as by recently-acquired businesses, which Refresco said are 'delivering volumes in line with our plan'.
In January, Refresco completed the acquisition of AZPACK in Tempe, Arizona, and has commenced integration of the business, while it is also in the process of integrating two former PepsiCo plants in Spain, and a former Coca-Cola European Partners facility in the UK.
"AZPACK, as well as the former plants of PepsiCo and Coca-Cola European Partners we incorporated in the previous quarter, have already contributed to volume growth across Europe and North America this quarter," commented Refresco chief executive Hans Roelofs.
"With the proposed acquisition of three Britvic bottling activities in France still expected to close in the course of this year, we continue to strengthen our capabilities in key markets."
He added that the group's "solid overall financial position, strong corporate culture of agility and entrepreneurship, and resilient strategy, enable us to further grow as we continue our journey of becoming a full-service beverage solutions provider."
Total group revenues totalled €980 million for the period, with North America contributing €413 million of this total (up from €355 million in the same period the year before), and Europe contributing €567 million (compared to €571 million a year earlier).
COVID-19 Effects
Due to the coronavirus crisis, Refresco said that demand across its customer base was 'irregular' during the period, with a period of stockpiling in March having an effect on future orders.
At the same time, the group has seen lower demand from its branded customers, due to the continued closure of the HoReCa channel.
As a result, Refresco described order volumes for the beginning of the second quarter as 'very soft', with the group expecting Q2 to be more challenging, with limited predictability of demand.
It added that despite 'elevated levels' of absenteeism, the vast majority of its 61 manufacturing sites remain fully operational, and that it has not seen any material effects on its supply chain.
"We have worked closely with our customers to meet the increased demand for our products, especially as COVID-19 hit Europe and North America in March," Roelofs added. "As we look ahead, uncertainty surrounding the impact of COVID-19 continues and demand becomes even more irregular - already showing soft order volumes at the start of the second quarter.
"While we continue to take actions to respond to immediate customer requirements, we also actively pursue our long-term growth strategy focused on strengthening our offering to retailers and A-brands, providing additional services such as warehousing and procurement, and we are pursuing accretive acquisition opportunities."
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
