AG Barr grows profits through innovation, partnerships

By Gwen Ridler

- Last updated on GMT

Innovation and partnerships have helped AG Barr shrug off the pressure of Brexit
Innovation and partnerships have helped AG Barr shrug off the pressure of Brexit
Drinks manufacturer AG Barr has shrugged off the effects of Brexit to boost profits and sales over the past financial year, driven by innovation, building partnerships and the success of its Irn Bru brand.

While Brexit fears had affected the company negatively, investment in long-term growth had helped counter its impact, according to chairman John Nicolson, commenting on its results for the 52 weeks to 27 January.

“Margins have been negatively impacted by the continued weakness in sterling, affecting our input costs. However, we understand the importance of investing for long-term growth, as demonstrated by our ongoing investment behind our assets, infrastructure, brands and people,”​ added Nicolson.

‘Market share gains’

“All our core brands are in growth and the exciting new products we launched last year have gained momentum, contributing to market share gains across our UK markets.”

Meanwhile, sales of Irn Bru rose by 8%, its biggest year of sales for the brand, said chief executive Roger Barr. This was despite the product attracting media attention when it was reformulated to contain less sugar.

AG Barr’s core brands all saw sales growth last year. Rubicon sales were up 5.3%, while its Funkin cocktail mixer sales grew by 25%.

Chief executive Roger White said the company’s results were ahead of the soft drinks market performance throughout the year, supported by innovation and the development of partnerships.

White added: “The UK economic landscape is expected to remain uncertain for business as a whole, with regulation, changing customer dynamics and consumer preferences adding further volatility for the soft drinks industry.

Capitalise on opportunities’

“We remain confident in our ability to capitalise on the opportunities to grow our business and deliver long-term value to shareholders.”    

Shore Capital analyst Phil Carroll said AG Barr had issued a strong set of full-year results, which highlighted broad-based revenue growth that had translated into a robust increase in profits.

“This is especially notable when taking into account input cost inflation and management strategically investing in the business to ensure it is well-positioned for the challenges that FY2019F might bring,”​ said Carroll.

“We believe Barr and its strong management team enter this year with a robust platform operationally, an excellent brand portfolio that is predominantly exempt from the upcoming sugar levy, and a balance sheet with net cash that provides significant flexibility and optionality.”

AG Barr posted 4.2% growth in pre-tax profit to £44.9m for the 52 weeks ended 27 January 2018. Sales for the manufacturer were up 8% to £277.7m, compared with £257.1m during the previous year.

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