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AG Barr third-quarter sales fizz higher

Irn-Bru: 8 per cent jump in sales. Picture: Dan Phillips

Irn-Bru: 8 per cent jump in sales. Picture: Dan Phillips

  • by DOMINIC JEFF
 

Analysts hailed AG Barr’s ability to keep its fizz in a difficult market as the Irn-Bru maker posted an 8 per cent jump in sales today.

The Cumbernauld-based group, which is behind other brands such as Rubicon and Strathmore, also flagged strong volumes in the 18 weeks to 1 December, its third quarter.

It told investors: “Our brands continue to perform well and in the period, our margins have been in line with our expectations.”

Barr said it has outperformed the market over the year to the start of its fourth quarter, with volume growth of 5.1 per cent ahead of the wider market’s 3.1 per cent increase.

The firm added: “The soft drinks market remains highly competitive as we enter the important Christmas trading period.

“We are now executing our strong seasonal trading plans and remain confident of delivering our full-year performance expectations despite tough year-on-year trading comparatives.”

The group, which saw a planned merger with rival Britvic fall through in July, said its new plant in Milton Keynes was performing well and a second phase of investment at the site is under consideration.

Analysts say the availability of extra canning capacity has been crucial to the group’s strong sales south of the Border.

The third-quarter update follows an equally upbeat first half, in which the soft drinks firm posted a 12.3 per cent rise in underlying half-year profits to £16.6 million and hiked its interim dividend by 8 per cent.

The figures are partly thought to reflect a relatively hot summer, but are pitched against tough comparators last year when Britain was basking in a festival of sport.

Nicola Mallard, an analyst at Investec, said: “AG Barr’s third-quarter data shows barely a slowdown from the strong second-quarter performance which benefited, to some degree, from the stronger summer weather-led market.

“The group is focusing a little more on driving volumes, but, importantly, not at the expense of margins.”

She said Barr had been exceeding Investec’s sales projections for the year, although the all-important festive season will determine wether an upgrade to numbers is in order.

Shore Capital analyst Phil Carroll was also awaiting Christmas numbers, although he was hopeful of “some level of upgrades for the full year, subject to a solid performance over Christmas”.

However Charles Pick, at Numis, was prepared to pencil in an upgrade. He said: “We had assumed revenue [would be up] 4.8 per cent for the second half but this is clearly likely to be low beam. We now assume 7 per cent [growth] that allows for a tough Christmas comparison, and then 6 per cent a year thereafter.”

Numis also edged up its profit forecasts for Barr and raised the target price on the shares, although it continues to rate the stock a “hold”.

 

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