AG Barr posts growth in spite of volatile weather

By Gwen Ridler

- Last updated on GMT

AG Barr posted growth despite extreme weather conditions and the Government's crack down on sugar
AG Barr posted growth despite extreme weather conditions and the Government's crack down on sugar
Extreme weather conditions and government legislature have done little to dent drinks manufacturer AG Barr’s sales and profits, as it posted growth in its interim financial results.

In a year punctuated by significant snowfall in the winter – nicknamed the ‘Beast from the East’ – and a recent record-breaking hot summer, the company’s revenue grew 5.5% to £136.9m in the six months to 28 July 2018.

Volume share within the total soft drinks market grew 15% for the company, led by its flagship IRN-BRU brand in England and Wales where it continued its strategy of building distribution points and increasing penetration.

AG Barr said it had continued to invest in its core brands, including Rubicon and Strathmore, following the implementation of its reformulation programme.

Profits up

Profit before tax and exceptional items rose 4% to £18.2m. Statutory profit before tax was slightly down from the same period in 2017 – £18.2m down from £19.4m – which it explained was the result of a property disposal the previous year.

Chief executive Roger White said the company had delivered a solid financial performance in spite of the implementation of the Soft Drinks Industry Levy, reformulation, extremes of weather and CO2 ​shortages.

 “We will continue to ensure our actions and investment decisions support our long-term growth strategy,”​ he added. “We plan to invest further across the second half of the financial year, which we anticipate will have a moderate impact on margins.  We remain on target to meet our profit expectations for the full year.”

Principal risks and uncertainties that could have a material impact on the drinks manufacturer’s performance for the remaining 26 weeks in the financial year remained unchanged from the group’s predictions at the beginning of the year.

Intervention on sugar

This included changing consumer attitudes towards sugar and the further government intervention on sugar, as well as adverse publicity in relation to the soft drinks industry, the group or its brands.

AG Barr remained uncertain about the impact that Brexit would have on the company, but warned that commodity buying and its non-UK business could be affected.

Commenting on the results, Phil Carroll of city analyst Shore Capital said the manufacturer was well positioned to deliver another year of progress.

“We believe AG Barr has an excellent portfolio of brands with a strong innovation pipeline, an efficient and flexible manufacturing capability, as well as net cash on its balance sheet.

“Therefore, we are confident management can continue to build on its strong track record of shareholder value creation in the future.”

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