New AG Barr chief executive Euan Sutherland delivered a positive set of results and said the Cumbernauld-based company is confident of a strong second half.

Total revenue in the six months to 27 July grew by 5.2% to £221.3m, driven by a 7% rise in soft drinks, with Rubicon and Irn-Bru delivering both volume and price gains.

Profit before tax fell 10.4% to £24.9m after £4.4m of one-off costs related to the closure of Barr Direct and the integration of Boost, moves that were part of a restructuring that also saw 150 job losses. Adjusted PTP came in 8.5% higher at £29.3m.

As forecast, the company declared an increased interim dividend, up 17% at 3.1p (2023: 2.65p).

Shares in the company, which are trading at a five-year high, closed 8.46%, or 56p lower at 606p as investors took profits.

Mr Sutherland, who succeeded Roger White in the summer, said: “My first few months with the business has further cemented my view that AG Barr is an excellent business with exciting, tangible and deliverable growth opportunities. 

“I am pleased to report a strong set of first half results. The business has delivered both revenue and profit growth as well as good progress on our key strategic margin rebuild programme.

“We continue to invest in our supply chain to build the capacity to support our growth plans and manufacture more volume in-house.  This will deliver tangible benefits including enhanced margin and improved service resilience.

“We anticipate a strong H2 performance from our four core brands – IRN-BRU, Rubicon, Boost and FUNKIN – in particular, with current trading momentum underpinned by further marketing and innovation activities. 

“Guidance on 2024/25 revenue and operating margin is unchanged.  We remain confident of continued, sustainable growth over the long term, in line with our strategic ambitions.”

Market reaction

John Moore, senior investment manager at RBC Brewin Dolphin, said: “AG Barr has delivered another solid update, despite the effects of disappointing summer weather.

“The only fly in the ointment is the performance of its Funkin pre-mixed cocktail brand – but that has more to do with market challenges than the product specifically.

“As ever with AG Barr, it’s a question of what the company will do with its financial strength.

“There have been several bolt-on acquisitions in recent years, and you wouldn’t rule out further additions in the not-too-distant future. Ensuring long-term scale and independence may require moving the needle – a large merger or acquisition may be one option for moving forward.”

Russ Mould, investment director at AJ Bell, was encouraged by the underlying strength of the business. 

He said: “The last decade has thrown a lot at AG Barr, in the form of new regulations on sugar content, Covid-19, carbon dioxide shortages and input cost inflation (and they are all before the usual issues of competition and changing trends in consumers’ tastes), but the Scottish firm’s latest set of first-half results suggest it is coping admirably.

“Sales, profits and the dividend are all up and although the share price is not fizzing higher today it already stands at a five-year high, in recognition of how both revenues and net earnings could set new all-time peaks in the next fiscal year, to January 2026, if analysts’ forecasts prove accurate.”