Raw material costs up says Irn Bru maker Barr but so are sales

By PETER RANSCOMBE
Published on 27/07/2012 22:18

IRN-Bru-maker AG Barr yesterday warned that its half-year profit margins would be lower than last year because of rising raw material costs.

The company said that margins would be affected because it had also been investing heavily in marketing earlier in the year so as to avoid the Olympics and that there had been a different mix in its product sales.

Yet, Cumbernauld-based Barr said its sales were rising ahead of the soft drinks market as a whole and that it expected to post a 4.5 per cent rise in turnover to about £130 million for the six months to 28 July.

Market researchers at Nielsen reported that volumes in the total soft drinks market were down 1 per cent, while value was 2 per cent ahead in the 26 weeks to 23 June.

Barr said: “Despite the significant impact of unprecedented weather in the early summer, we have delivered solid growth as our brands have responded extremely positively to continued development and investment.”

Charles Pick, an analyst at Numis, said: “This is an amazing result, given the atrocious weather and, although there is a first-half margin warning, it still seems likely pre-tax profits can advance year-on-year.”

Barr also said it was pressing ahead with its plants to build a production plant near Milton Keynes. The project, which has now received planning permission, will cost about £41m and will be completed next year.