Soft drinks manufacturer AG Barr restores its sales growth

By Rick Pendrous

- Last updated on GMT

AG Barr has invested at its Milton Keynes and Cumbernauld factories
AG Barr has invested at its Milton Keynes and Cumbernauld factories

Related tags Ag barr A.g. barr

Soft drinks maker AG Barr, which manufactures the iconic Irn Bru brand, has restored its sales, which were up 3.9% in its third quarter trading results to November 28 compared with the same period last year, putting it back on track to meet its long-term growth strategy, according to city analysts.

Investec’s Nicola Mallard, said AG Barr had focused its promotional activities on the second half of the year, having resolved the IT problems that had hit customer service levels in the first half (1H). However, she noted the market in which it operated remained highly competitive. Its full year (FY) results hinged to a large degree on its all-important Christmas trading results.

“Reassuringly, after the challenging 1H, it shows the group has returned to growth, with ongoing revenues ​[which excludes income from the discontinued distribution contract with Orangina, but includes Funkin, acquired last February] showing growth of 3.9%,”​ said Mallard. “This was achieved against poor late summer weather and a highly competitive market.”

Profit

Mallard retained her earlier forecast. “We expect the group to report a full year performance broadly in line with last year,” ​she said. “Our profit before tax forecast is £41M, with earnings per share​ [EPS] of 27.9p (FY15 EPS 28.1p).”

AG Barr is nearing completion of its warehouse extension at Milton Keynes, while other production capability programmes, both at Milton Keynes and in Cumbernauld, where a £5M investment in a new high-speed glass filling line was announced last August, were progressing.

Strong cost control

Analyst Phil Carroll at Shore Capital added: “We note the comment by the company that margins remain in line with its expectations as it continues to maintain a strong focus on cost control. In a deflationary environment this is a key KPI​ [key performance indicator], in our view.

“We are forecasting an improvement in the group operating margin year-on-year, partly aided by the acquisition of Funkin and also the discontinuation of activities relating to Orangina and Findlays ​[water coolers].

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