UK: AG Barr sees FY profits slide despite sales resilience

• FY net profits fall by 9.2% to GBP25.6m (US$38.8m)
• Net sales in 2012 rise by 6.6% to GBP237.6m
• FY operating profits down by 10.6% to GBP31.8m
• New Milton Keynes plant to open this summer

AG Barr has posted a drop in full-year profits despite a rise in sales that outpaced the rest of the UK soft drinks market, the company announced today (21 March).

Net profits fell by 9.2% to GBP25.6m (US$38.8m) in the 12 months to 26 January, the Scottish company said today (21 March). Net sales increased by 6.6% to GBP237.6m over the same period while operating profits decreased by 10.6% to GBP31.8m.

Barr blamed the squeezed margins on higher input and promotion costs as well as volatility in the market. Last year, Barr's core UK market was hit by record rainfalls, depressing soft drinks demand. The company also complained about rising sugar costs that it predicted will push prices up by about 5%.

“Over the last financial year, the business has continued to grow revenue, volume and profit despite a difficult marketplace and background of rising input costs,” Barr chairman Ronald Hanna said. “Despite these challenges, sales revenue continued the long term trend of outperforming the soft drinks market with an increase of 6.6% compared to 2.9% in the market.”

Barr highlighted the decision last month by the UK's Competition Commission to block its planned merger with Britvic. Hanna said the company disagreed with the commission's decision and is working to “seek clearance of the proposed merger”.

Looking forward, Barr said it is “cautiously optimistic” despite a difficult economic outlook. It said its planned warehouse and production facility in Milton Keynes is making “excellent progress” and should be open by this summer.

Barr's stock price climbed slightly in morning trading, up by 1.5%.