Dutch-based drink-bottling group Refresco produced 2,273 million litres and posted a quarterly revenue of €774 million in Q1 2018 – a 47.7% increase year on year.
Gross profit margin by litre was €0.144 – a slight increase on the same period in 2017 (€0.141). Its adjusted EBITDA was €44 million – a 15.9% increase on the previous year.
The company noted in a release, 'Gross profit margin per litre was better than expected, reflecting our decision to decline low-margin contracts in the retailer brand market in Europe and mix effects within the geographies.'
Capital expenditures amounted to €19 million – a slight increase on the previous year. The funds were invested in the optimisation of current manufacturing sites and warehousing facilities in Europe and North America.
Acquisition And Refinancing Costs
Operating costs rose to €324 million, from €223 million in 2017, due mainly to the acquisition of the bottling arm of Canadian-based beverage and foodservice firm Cott in January 2018, following a lengthy approval process from the UK's Competition and Markets Authority. Operating profit fell to €3 million (a €10 million drop from 2017).
The group saw a net loss of €40 million, compared to a profit of €6 million last year. Its debt increased nearly threefold year on year (rising from €647 million to €1,698 million).
The CEO of Refresco, Hans Roelofs, commented on the first-quarter results, saying, "A significant event in the first quarter was the completion of the acquisition of Cott's bottling business. By combining the two activities, our production volumes grew significantly in both North America and Europe. Cash flows from operating activities remained strong, while one-off acquisition and refinancing costs impacted our net results.
"In terms of integration, we are pleased to report that the process of combining Refresco and Cott's bottling activities is off to a good start, and we expect to complete this in the two-year period ahead. Following the acquisition of Cott's bottling activities, and with new owners on board to fuel the next phase of our growth, we are in a prime position to build on our customer relationships and drive further consolidation in Europe and North America," Roelofs added.
Acquisition of Cott
The acquisition of Cott helped Refresco almost double its production volumes, to around 12 billion litres, and 'provides customers access to seamless service across geographies and an unrivalled production platform, with access to all non-alcoholic beverage categories', according to a company statement.
Following completion of the deal, Refresco now has a footprint of 59 facilities in 12 countries, employing over 9,500 people.
In the US, its operations were 'significantly extended', with the group operating 22 manufacturing sites in the US, four manufacturing sites in Canada, and one manufacturing site in Mexico. It also has 26 manufacturing sites in Continental Europe and six manufacturing sites in the UK.
Packaging Debt
In April, Sunshine Investments BV – a consortium of PAI Partners SAS and British Columbia Investment Management Corporation – closed the public offer on Refresco Group NV. Shortly thereafter, the new owners announced that the packaging firm's debt would be partially refinanced.
Sunshine Mid BV, the owner of Sunshine Investments, launched an offering of €445 million aggregate principal amount of senior notes, due in 2026.
The net proceeds from the offering, if completed, are expected to be used to repay the bridge facility borrowed in connection with the acquisition.
On the completion of the public offer by PAI and BCI, Refresco repaid the credit used to finance the Cott acquisition and entered into a new syndicated loan, equalling €1,055 million.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Karen Henderson. Click subscribe to sign up to ESM: European Supermarket Magazine.
