Plenty of fizz in Irn-Bru maker AG Barr’s results

Irn-Bru maker AG Barr is poised to serve up a steady rise in annual sales despite economic uncertainty and the prospect of a further clampdown on the soft drinks industry.

AG Barr has battled the new sugar tax, a CO2 shortage and extreme weather. Picture: John Devlin

The Cumbernauld-headquartered group, which also makes Rubicon and Tizer, said full-year revenue was expected to top £277 million, which would mark a rise of about 5 per cent on the previous year.

In a trading update for the 52 weeks ending 26 January, ahead of releasing its results in March, the firm said there had been a “continued positive trading performance” across the period.

It highlighted a “strong trading execution” across its core brands and the “continued success of our key innovation”, which is said to have led to further gains in a UK soft drinks market that saw volumes rise 3 per cent while value increased by 8 per cent.

The group, which is led by chief executive Roger White, told investors: “The impact of the soft drinks industry levy has been evident across the UK soft drinks market with value growth significantly outstripping volume in the period.

“Having taken the opportunity to drive our volume growth during this period, we expect to return to a more value-led trading strategy in 2019.

“Throughout the year we have remained committed to investing across our brands, assets and people which, while supporting our growth, has had a moderate impact on operating margin.”

In September, AG Barr said it had battled the new sugar tax, a CO2 shortage and extreme weather to report a solid rise in first-half sales and pledged further investment in its brands.

It posted a 4 per cent hike in underlying pre-tax profits to £18.2m for the six months to 28 July on sales that were 5.5 per cent higher at £136.9m.

An interim dividend of 3.9p per share was declared by the group, whose other brands include Strathmore and Funkin – up 5 per cent on the year before.

In its latest trading update, AG Barr said a tight control on costs had been maintained. A £30m share buy-back programme has continued and is now expected to complete during the course of 2019, slightly later than previously indicated.

The firm added: “Looking ahead, the current political and economic uncertainty in the UK looks set to continue.

“For the soft drinks industry, further regulatory intervention is on the horizon and consumer dynamics continue to evolve.

“Our strong and flexible business model, our portfolio of differentiated and growing brands and our well-invested and efficient asset base give us confidence for continued profitable growth as we enter a new financial year.”

Analysts at house broker Shore Capital noted: “AG Barr’s trading update confirms another year of robust progress. A strong balance sheet is a key virtue of the AG Barr business and investment case.”