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Firm passes taste test

Irn-Bru heads off sugar levy with new formula


Taste test: Response to Irn-Bru’s new formula has been encouraging

Irn-Bru manufacturer AG Barr says it will effectively escape the new sugar levy after it reformulated its soft drinks.

The company said it had exceeded its target of reducing or removing sugar from 90% of its portfolio.

It now expects up to 99% will contain less than 5g of total sugars per 100ml before the implementation of the soft drinks industry levy next month.

An unprecedented number of new recipes have been developed and delivered, with some products reducing their sugar content by up to 70%.

Consumer response to the sugar reduction in regular Irn-Bru in early January 2018 “has so far been encouraging”, said chief executive Roger White.

“Transforming our portfolio to align more closely with changing consumer preferences has been a significant strategic priority over recent years, drawing on the skills and experience of many individuals across our workforce whose efforts are highly valued and appreciated.

“As the implementation of the soft drinks sugar levy now approaches we will ensure that we remain focused on the consumer and responsive to the changes we anticipate in the soft drinks market dynamics.”

Financial headlines

●    Statutory profit before tax increased by 4.2% to £44.9m (2017: £43.1m) on revenue up 8.0% to £277.7m (2017: £257.1m)

●    Profit before tax and exceptional items increased by 4% to £44.1m (2017: £42.4m)

●    Gross margin increased by 20bps to 47.1%

●    Operating margin before exceptional items decreased by 60bps to 16.2%

●    Basic earnings per share before exceptional items increased by 3.4% to 31.30p (2017: 30.26p)

●    Basic earnings per share increased by 4.8% to 32.25p (2017: 30.78p)

●    Net cash position at year end of £15.0m (2017: £9.7m)

●    Proposed final dividend of 11.84p per share (2017: 10.87p) to give a proposed total dividend for the year of 15.55p per share, an increase of 8.0% over the prior year

Strategic highlights

●    Strong core brand trading and the continued successful innovation accelerated growth across our soft drinks portfolio, significantly outperforming the market

●    Funkin revenue growth of 25% reflecting growth across all product segments

●    99% of portfolio now out of scope of the soft drinks industry levy

●    A new long term strategic partnership agreement completed with Bundaberg Brewed Drinks effective April 2018, in addition to the San Benedetto partnership disclosed earlier in the year

●    PET investment at Milton Keynes delivered successfully

●    Share repurchase programme progressing to plan

●    Strong innovation pipeline for 2018

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