LONDON, July 12, 2012 /PRNewswire/ --
Investors with a share in soft drink maker Britvic were left with a sour taste in their mouths after a recent product recall prompted the company to issue a profit warning yesterday (July 11), forcing shares to close the day down 13.3% after Chief Executive Paul Moody admitted that the company is likely to miss its profit forecasts this year.
In the following article, we look at what happened and how you can spread bet shares with Finspreads - regardless of whether they rise or fall.
Product Recall Costs £25m
The UK's second-largest soft-drink maker had recently recalled its children's drinks Robinsons Fruit Shoot and Fruit Shoot Hydro packs from the UK and France over faulty packaging.
The recall, initially expected to cost the company pre-tax profits of between £1 million and £5 million, is now expected to potentially cost up to £25 million pre-tax profits during the current and next fiscal years.
While investors may be hoping that worst is over Britvic, some analysts are now warning that shares may fall lower still. News reports yesterday revealed that brokerage firm Panmure Gordon has downgraded the stock from 'hold' to 'sell' and lowered its price target for the company from 350p to 250p.
Britvic's profit warning may be an indication for some that Britvic shares could fall lower, but spread betting investors may yet be able to profit from any price movements in Britvic shares, irrespective of whether prices recover or fall further in the coming days.
Spread betting - a tax-free* alternative to conventional shares dealing
With spread betting, investors can speculate on whether they expect Britvic shares to rise or fall in the coming days and net a potential profit.
For instance, if you expected Britvic shares to continue falling, you would take a short spread betting position (sell) on Britvic shares. Conversely, if you expected Britvic shares to rise, you would take a long position (buy) on the company. You would profit so long as Britvic shares moved in the direction you had expected.
If, however, Britvic shares moved in the opposite position (i.e. if you had expected Britvic shares to rise and they went down instead or if you expected the shares to fall and they went up instead), you would make a loss. Find out more about how you could spread bet with Finspreads.
Spread betting is a leveraged product, which means that you can take a position on the markets by putting down just a percentage of the full value of your position. Learn more about how to spread bet shares with financial spread betting provider Finspreads.
Spread betting is a leveraged product which can result in losses greater than your initial deposit. Ensure you fully understand the risks.
* Spread betting is exempt from UK stamp duty and Capital Gains Tax (CGT). However, tax laws are subject to change and depend on individual circumstances. Please seek independent advice if necessary.
Finspreads is a leading online financial spread betting firm, offering access to thousands of instruments on the world's financial markets.
The company pioneered fully interactive online spread betting in 1999 and continues to invest in technology to ensure that its service remains amongst the market leaders.