Focus - UK: AG Barr shares up as it “outperforms” market
"Solid" set of results for AG Barr
AG Barr shares have risen by 1.6% as the UK soft drinks firm booked a 21% increase in full-year profits on a market that has proved more resilient than expected.
Shares in the Irn-Bru maker reached 915 pence, up 14.50 pence at 12.42 GMT today (22 March) as the firm “significantly outperformed” the UK soft drinks market with strong growth in its carbonate brands in 2009.
Normalised profits before tax (pre exceptional items) for the year ended 30 January 2010 increased to GBP27.9m (US$41.9m). Profits before tax for the 12-month period rose to GBP24.5m, an increase on the prior year of 5.3% after charging exceptional items of GBP3.4m.
Altium Securities analyst Wayne Brown told just-drinks it was a “solid” set of results against a backdrop of a “challenged economy”.
“The whole UK soft drinks market has proved to be a lot more resilient than what we had all anticipated and certainly there are some significant winners,” Brown said.
“AG Barr is chipping away with like-for like sales growth of 10.6% against a market that is only up 2%, which highlights some impressive market share gains.
"I think some of those market share gains have been in England, certainly on the back of Rubicon as well as some increased sponsorship of Irn-Bru in some sports journals etc, which has certainly helped them increase distribution gains and target market share which they have clearly delivered which has seen some really good top line growth.”
The firm delivered full year sales of GBP201.4m, an increase of 18.7% on the prior year. The increase was seen across both the still drinks, water and carbonates segments.
Across the UK, the firm’s share of carbonates, excluding mixers, increased by 6% and in England and Wales share increased by 20%. Carbonates recorded a 10.1% year-on-year increase in value, “well ahead of the market”, AG Barr said.
Within the carbonates segment, Irn-Bru delivered year-on-year growth of 5%.
Brown said “good cost savings” across the business helped the firm’s margin expansion.
“We’ve seen gross margins increase to 51.3% and you’ve seen operating profit margins increase quite extensively as well. So I think the business has very strong momentum and certainly with a focus on the core brands being Irn-Bru, Rubicon and the Barr’s flavoured carbonated range, the firm has certainly outperformed very significantly.”
He added: “It’s good to see the shares up and good to see such positive statements and good growth in dividend as well, so all round very positive.”
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