Profits slump as Irn-Bru maker AG Barr sales drop

AG Barr have suffered a drop in the first half sales. Picture: Contributed
AG Barr have suffered a drop in the first half sales. Picture: Contributed
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IRN-BRU maker AG Barr is this week expected to reveal lower half-year profits after a drop in sales blamed on unseasonal weather.

The Cumbernauld-based firm recently told investors that poor weather and tough comparisons with last year, when trading was boosted by the Commonwealth Games in Glasgow, would see sales for the six months to 25 July drop by about 5 per cent year-on-year to £128 million.

We plan to regain sales momentum

AG Barr has also seen its revenues affected by the “scale and complexity” of a redesign of its business processes, which it said had thrown up “short-term customer service challenges”.

Numis analyst Charles Pick described the issues, linked to staff learning how to use the new systems, as “major”, with sales made to impulse buyers especially affected.

In a note to clients, he said: “We are not at liberty to repeat the loss of sales from this factor but the indicated first-half sales shortfall would have been nowhere near as bad in its absence.”

Investec analyst Nicola Mallard said the broker has pencilled in a pre-tax profit of about £17m to £17.5m for the first half, down from £19m a year ago.

“The group states it expects to meet expectations for the full year, which will require a stronger second-half performance, but Barr has previously delivered better than market growth, given its strong brand portfolio and new distribution opportunities,” Mallard said.

Barr, which also produces the Rubicon and Tizer soft drinks brands, posts its interim results on Tuesday.

In its July update, it said: “We expect trading across the market will remain competitive. However, assuming there are no significant changes to the competitive or customer landscape and that we continue to make good progress on all our change initiatives, we plan to regain sales momentum which would enable us to meet our expectations for the full year.”