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Solid figures from drinks firm

AG Barr defies sugar tax to sweeten investor appetite


AG Barr saw another six months of strong sales


Irn-Bru maker AG Barr shrugged off the new sugar tax, the March cold snap and CO2 shortage and raised profits in a strong first half to the year.

Analysts have been keen to learn what impact the triple whammy of the levy, Beast from the East and gas supply issue would have on the interim figures.

The company, which also makes Rubicon, Strathmore water and Funkin, turned in a 4% rise in pre-exceptional pre-tax profits to £18.2 million in the six months ended 28 July (2017: £17.5m). Revenue grew by 5.5% to £136.9m (2017 : £129.8m).

Roger White, Chief Executive, said: “We have delivered a solid financial performance in the first half of the financial year, navigating through the Soft Drinks Industry Levy implementation, reformulation, extremes of weather and CO2 shortages in addition to a dynamic consumer, customer and macro-economic environment. 

“Our core brands have performed well and have good momentum with both consumers and trade customers. 

“We will continue to ensure our actions and investment decisions support our long term growth strategy. 

“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.”

Alasdair Ronald, senior investment manager at Brewin Dolphin, said: “Perhaps it’s no surprise that analysts will be focusing on the performance of Irn-Bru, which has contained 50% less sugar since January.

“The company’s claim that most people won’t taste the difference appears to have been borne out in these results and the market will also be pleased with early signs of success with new products and partnerships – AG Barr highlighted its ventures with San Benedetto and Bundaberg, in particular.”

Financial headlines

●   Revenue grew by 5.5% to £136.9m (2017 : £129.8m) 

●    Profit before tax and exceptional items increased 4.0% to £18.2m (2017 : £17.5m) 

●    Statutory profit before tax of £18.2m, compared to £19.4m in the prior year (which included £2.5m of exceptional gain from a property disposal)

●    Operating margin of 13.4% (2017 : 13.9% before exceptional items) 

●    Earnings per share before exceptional items increased by 8.6% to 12.74p (2017 : 11.73p) 

●    Free cash flow of £9.4m (2017 : £20.0m) 2has resulted in a net funds position of £4.2m at the period end (2017 : net funds of £7.9m)

●   An interim dividend of 3.90 pence per share (2017 : 3.71 pence) has been declared, an increase of 5% on the prior year

●    Balance sheet remains strong

●    Share repurchase programme on track

Strategic highlights

●    Solid financial performance having carefully navigated through a challenging and volatile marketplace

●   Continued investment in core brands and innovation delivering strong revenue performance and market share gains

●    Newly established partnerships with San Benedetto and Bundaberg progressing well

●    Funkin brand gaining traction in new formats and new market segments

●    Further progress across sustainability agenda with commitment to introduce up to 50% recycled material content into our PET bottles

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