FDBusiness.com

Refresco, which has just started the integration of Cott’s bottling activities to create the world’s largest independent bottler for retailers and A-brands, has reported a 9.9% increase in volume to 7,104 million litres for 2017, mainly driven by the full year effects of the acquisitions of Whitlock Packaging in the US and DIS in the Benelux and solid organic growth in contract manufacturing, partly offset by decrease in retailer brands, Iberia in particular. Contract manufacturing volume comprised 36.3% of total volume, up from 26.8% in 2016.

Revenue for 2017 amounted to €2.269 billion, an increase of 7.7%. As revenue in the US consists almost entirely of filling fees, the revenue is relatively low compared to the volumes. For the full year, operating costs increased to €897 million from €787 million reflecting the acquisitions and significant costs relating to the introduction of new products and new production lines across the business. These differences resulted in relatively higher other operating costs such as temporary staff, direct production cost, external warehousing cost and maintenance cost.

EBITDA totalled €191 million compared to €217 million in 2016. The one-off costs of €23 million in 2017 were related to the acquisition of Cott’s bottling activities (€12 million) and the restructuring of the plant in Hamburg, Germany (€11 million).

For the full year total capital expenditure spending was €85 million (€88 million in 2016). Capex was invested in the installation of several new production lines and in the optimization of the existing manufacturing sites and warehousing facilities.

Hans Roelofs, chief executive of Refresco, comments: “2017 was for Refresco strategically a very good year and financially challenging. We signed a transformational deal to acquire Cott’s bottling activities, creating the world’s largest independent bottler with leadership positions across Europe and North America. As a result we will grow considerably, gain 4,000 new colleagues, 29 manufacturing sites and fulfil our ambition to operate a market leading bottling platform across two continents. It is a huge step forward, right at the heart of our buy & build strategy.”

He elaborates: “A weak summer in almost all markets and continued pressure on retailer brands had an adverse effect on volumes and results. Our results were also influenced by higher than expected costs linked to the start-up of several new Aseptic PET lines across the business. This technology is critical to our future because it enables us to meet changing consumer preferences for more innovative recipes and packaging formats.”

Refresco is to build a new manufacturing site and warehouse in Le Quesnoy, France to replace current facilities and to accommodate Aseptic PET volumes to service customers in northern France. Le Quesnoy carton volumes will be transferred to the new manufacturing site and two new Aseptic PET lines will be installed. The first phase of the construction work will begin in Q2 2018, with production scheduled to start in 24 months. In 2018 investments are estimated at €43 million and are to be funded partially through operational lease and partially through operating cash flow.

Hans Roelofs adds: “The launch of the recommended cash offer of all Refresco shares by PAI and bcIMC is a further exciting development for our company. With their track record, financial strength and understanding of our business and the beverages industry, the consortium can support Refresco’s strategy going forward. We are convinced that this is a good transaction for the company and its stakeholders.”