UK: AG Barr sees FY profits slide despite sales resilience

By | 21 March 2013

  • 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
Barr is still hoping to merge with Britvic

Barr is still hoping to merge with Britvic

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%.

Expert analysis

A.G.BARR p.l.c. (BAG) - Financial and Strategic SWOT Analysis Review

A.G. Barr p.l.c. (A.G. Barr) is a soft drinks manufacturing and marketing company. The company offers a wide range of soft drinks in bottles and cans. The company markets its products under brand names such as IRN-Bru and Barr. It also produces, distributes, and sells spring water and flavored water products and functional water containing fruit juices and vitamins. The company operates through four production sites located at Cumbernauld, Forfar, Tredeger and Pitcox. It manages partnerships with Orangina and Rockstar and distributes and markets its products in Russia, Spain, the UK and Australia. The company is headquartered in Cumbernauld, the UK.

Sectors: Company results, Soft drinks

Companies: AG Barr, Britvic

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