UK: AG Barr defies bad weather with upbeat H1
AG Barr has posted a slight lift in operating profit for the six months to the end of July, despite the poor summer weather in the UK.
The Scotland-based soft drinks company said today (25 September) that operating profit for the half-year was up to GBP9.83m (US$19.76m) from GBP9.68m a year earlier. Turnover also rose, by 7.9% to GBP77.9m, thanks in part to the contribution of the Strathmore water brand, which AG Barr bought in June last year. On a like-for-like basis, sales were up by 2.3%.
"The total soft drinks market, although buoyant in our first quarter, has been significantly impacted by the exceptionally wet weather experienced during May, June and July," the company said. "Over the full six months the UK soft drinks market as reported by Nielsen grew by 1% in value but was 5% down in volume terms. This first half market performance masks the comparative effect of the weather in the last three months particularly in July when the market was 19% behind in value and 25% behind in total soft drinks volume."
The company, which had been linked to a possible purchase of UK rival Nichols earlier this year, warned that input costs continue to rise, "especially in commodity-related areas such as glass, plastic, aluminium and juices.
"We expect gross margins will be under further pressure in the second half but anticipate our cost-cutting actions ... should counteract much of this pressure during the current year."
Turning to the second half of its fiscal year, AG Barr warned that turnover to date has been impacted by the continuing poor weather, "but remains ahead of the prior year".
The company concluded that it believes it will meet expectations for the full year.
Last week, Nichols, which owns the Vimto soft drinks brand, said that discussions in relation to a possible takeover had been terminated. A source close to the situation told just-drinks earlier this year that AG Barr was in talks with the Nichols family to make a move for the company.
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