AG Barr profits drop as higher prices, disappointing weather dent sales
Irn-Bru maker AG Barr posted a drop in interim profit on Tuesday as revenues took a hit from higher prices, disappointing weather and brand challenges.
In the six months to 27 July, statutory pre-tax profit fell to £13.5m from £18.2m in the first half of last year, while revenue dropped to £122.5m from £136.9m.
The company said it returned its soft drinks business, particularly Irn-Bru, to its long-term value driven approach, improving price positioning over the half and reducing its promotional intensity within the market. This transition, along with disappointing spring and summer weather, namely in its key markets of Scotland and the north of England, had a short-term impact on volumes across the portfolio. This was exacerbated further by specific brand challenges in Rockstar energy and Rubicon juice drinks.
The group also said it had underestimated the volume benefit received last year from both one-off trading factors and favourable weather.
Barr described its first half as "disappointing", but said it was always expected to be a year of "pricing transition" for the business, which would lead to elevated levels of risk.
"We now have plans in place to address our specific brand related challenges and to ensure that the business is appropriately scaled to perform in the current market," it said.
"We are entering a period of less demanding trading comparisons and, as our new pricing establishes and our strong second half brand plans take effect, our focus is now on returning to long-term growth. Despite continuing economic uncertainty we expect to meet the revised profit expectations communicated in July."
Barr said it was beginning to see signs of acceptance of its new price and promotional positioning.
"Early indications are that increased average realised prices are compensating for the reduction in volumes experienced while shoppers readjust to new promotional price point."