Barr puts fizz into quarterly sales performance

Irn-Bru maker AG Barr has “restored revenue momentum” in its latest quarter, analysts said today, as the group stressed it was maintaining a tight grip on costs.

Bottles of AG Barr's iconic Irn-Bru

In a brief trading update, the Cumbernauld-based drinks firm said revenue from the ongoing business for the 18 weeks to 28 November increased by 3.9 per cent compared to the equivalent period last year. Year-to-date revenue from the ongoing business, as at 28 November, dipped 0.2 per cent. Year-to-date revenue on a reported basis declined by 2.2 per cent.

Barr said it was making good progress despite “continued difficult market conditions”.

It told investors today: “As anticipated, our revenue performance in the third quarter has gained momentum as we put the specific challenges of the first half behind us and return to our long-term growth strategy.

“Margins remain in line with our expectations, underpinned by ongoing tight cost control activity.

“Our balance sheet remains strong and there have been no significant changes in the financial position of the company since the publication of the interim accounts for the six months ended 25 July.”

The group said its warehouse expansion project in Milton Keynes was nearing completion while “good progress” was being made on the production capability projects at both Milton Keynes and Cumbernauld, designed to provide “increased flexibility and support future innovation opportunities”.

Looking ahead, Barr said: “We are now entering the important festive trading period and we anticipate the marketplace will remain highly competitive.

“However, our sales execution activities are well developed and, as previously stated, assuming satisfactory Christmas trading, the company remains on track to meet the board’s expectations for the year.”

Investec Securities analyst Nicola Mallard noted: “As we had hoped, AG Barr has restored revenue momentum in Q3, putting it back on track for its long-term growth strategy.

“The promotional focus has been more [second-half] weighted and the IT issues of [the first half] have been resolved.

“The market remains highly competitive, so the [full-year] outcome is still dependent on securing a solid Christmas performance, but the group has strong commercial plans in place and capacity available.”

The brokerage has a “buy” rating on Barr’s shares.