Drinks group on track for sugar cut
Irn-Bru shrugs off wet summer and higher costs
AG Barr is on target to cut sugar content
Irn-Bru maker AG Barr has shrugged off the effects of the wet summer and higher material costs to report a slight rise market share.
The company said it was on target to meet its targets on cutting sugar content in its drinks in line with legislation and said growth was continuing in recently-launched products.
Revenue for the half year to 29 July came in 8.8% higher, just ahead of guidance of 8%, while underlying profits rose slightly and the dividend is hiked 5%.
Roger White, chief executive said: “The strong sales momentum of the second half of last year has continued and has combined with significant progress from our innovation to deliver strong sales growth and market share gains in the period.
“While we maintain tight cost control across the business, we have increased investment in the support of our brands and innovation launches and expect to continue this across the full year. Our reformulation activities remain on track as we move into the final implementation stages of this initiative in what will be a busy second half.
“Although the soft drinks market has been impacted negatively in the short term by the mixed weather since late July, assuming market conditions across the balance of the year are reasonable, the Company remains on course to meet the Board’s expectations for the full year.”
● Total revenue grew by 8.8% to £136.6m (2016 : £125.6m)
● Profit on ordinary activities before tax and exceptional items increased 2.9% to £17.5m (2016 : £17.0m). Profit before tax was £19.4m (2016 : £21.1m) including an exceptional credit of £1.9m
● Operating margin before exceptional items was 13.2% (2016 : 13.9%)
● Free cash flow of £20.0m (2016 : £19.6m) has resulted in a net cash position of £7.9m (2016 : net debt (£6.6m)) at the period end
● An interim dividend of 3.71p per share (2016 : 3.53p) has been declared, an increase of 5% on the prior year
● Strong brand performance across the portfolio and in particular the continuing success of last year’s new product launches – Irn-Bru Xtra and Rubicon Spring
● Overall market share improvement, with sales performance in England and Wales particularly pleasing
● Good progress across the reformulation programme – on track for at least 90% of company owned brands to contain less than 5g of total sugars per 100ml by the end of the financial year (January 2018)
● Continued strong performance from the Funkin business with revenue up 31% in the period
● New PET production line at Milton Keynes now operational – project on time and budget
● £30m share repurchase programme commenced as planned