Fizz comes out of Irn-Bru maker AG Barr's profits

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Irn-Bru maker AG Barr has vowed to “take action to regain momentum” after the fizz came out of its sales and profits.

The group said the past year had been an “unprecedented” one for the soft drinks industry with “changing pricing and promotional dynamics” following the introduction of a sugar-tax levy alongside CO2 shortages and weather-related challenges.

AG Barr chief executive Roger White at one of the group's production facilities. Picture: Stewart Attwood

AG Barr chief executive Roger White at one of the group's production facilities. Picture: Stewart Attwood

In a trading update, the maker of “Scotland’s other national drink” warned that profits for the full year were likely to be down by as much as 20 per cent compared to the previous 12 months.

Revenue for the 26 weeks to 27 July this year is estimated to be in the region of £123 million, which would mark a 10 per cent decline on the prior year.

The Cumbernauld-based company said the weaker performance “has been exacerbated by some specific brand challenges, particularly in Rockstar energy and Rubicon juice drinks, as well as disappointing spring and early summer weather, most notably in Scotland and the north of England, and compounded further as we approach the half-year when the prior year comparative weather was at its peak”.

Barr’s Rubicon division has faced challenges since the introduction of the sugar levy, with several drinks companies having to change their recipes to reduce sugar levels.

The Rockstar energy division has also had to contend with a crackdown and awareness-raising by campaigners about teenagers drinking high-caffeine drinks.

Chief executive Roger White said that although the cocktail mixer division Funkin was growing well, it has been a challenging start to the year for the rest of the company.

He told investors: “Weather comparatives and trading, particularly in the impulse on-the-go market, have been even tougher than expected which, along with some brand-specific challenges, have led to a short-term impact on our financial performance.

“We are focused on returning to growth and will continue to take the actions we believe necessary to succeed in the dynamic environment within which we operate.”

These actions include launching three new Rockstar drinks by the end of the summer and “recipe improvement activity” for Rubicon juice drinks. It cautioned that “the benefit of these actions will not be felt until later in the second half of the financial year”.

Analysts at house broker Shore Capital noted: “In our opinion Barr is a fine company, with an excellent portfolio of brands, world-class manufacturing facilities, a strong balance sheet and high quality management.

“In recent trading periods there has clearly been a much tougher financial outcome than management and we anticipated, which leads to lower guidance. As such, we expect the market to mark down the group’s shares once it digests this disappointing news.”