AG Barr revenues grow despite sugar tax, CO2 shortages

AG Barr, the maker of Irn-Bru, posted a rise in full-year profit and revenue on Tuesday despite the introduction of the sugar tax, extreme weather and CO2 shortages.

In the year to 26 January 2019, profit before tax and exceptional items was up 2.5% to £45.2m on revenue of £279, up 5.6% from the previous year, driven by a strong volume performance. Statutory pre-tax profit, however, nudged down to £44.5m from £44.9m, reflecting a one-off past service pension charge of £0.7m.

AG Barr said it successfully delivered its reformulation plan, with 99% of the soft drinks portfolio currently exempt from the Soft Drinks Industry Levy and less than £0.2m costs from the levy.

The group grew its volume share within the total UK soft drinks market by over 11% year-on-year. It proposed a final dividend of 12.74p a share, up from 11.84p, taking the total dividend for the year to 16.64p, up 7% from the previous year.

Overall volume growth during the year was 6.9% compared to growth of 3% for the total UK soft drinks market, as measured by IRI MarketPlace data.

The carbonates business, which represents more than 76% of group revenue and 80% of gross profit, saw revenue increase by 8.9% and volume up 10.1%, mostly driven by Irn-Bru, the Barr flavours range and Rubicon Spring.

"These results are all the more pleasing taking into account the continued economic and political uncertainty experienced by UK business as a whole, as well as the particular challenges faced by the soft drinks industry, such as regulatory intervention in the form of the Soft Drinks Industry Levy, CO2 shortages and the resulting impact upon customer service," the company said.

It said 2019 is expected to be another uncertain year for UK-based businesses.

"For soft drinks this is likely to be made all the more challenging by further regulation and ever changing consumer dynamics. Despite these external factors we have confidence in our growth strategy and confidence that our people can execute it successfully. We have a proven track record of delivery and are well positioned to further grow and develop our business across 2019 and beyond."

broker Shore Capital said: "Against a backdrop of an inflationary UK soft drinks market driven by the implementation of the SDIL, Barr has executed well on its short term volume led strategy, including its own reformulation actions."