• H1 net profits dip 1% to GBP13.2m (US$17.1m)
  • Net sales fall 4% to GBP125.6m
  • Operating profits up 1% to GBP17.4m
AG Barr said it has been reducing sugar in its products

AG Barr said it has been reducing sugar in its products

AG Barr is to cut 10% of its workforce before the end of the year amid a declining UK market that hampered H1 sales and profits.

The Irn Bru maker, which also branded a proposed UK sugar tax "a punitive and unnecessary distortion", said today 90 jobs will go from its commercial, supply chain and central functions. The cuts are part of the final phase of a cost-cutting programme at AG Barr that comes as the trading environment in the company's core UK market puts pressure on performance.

Barr said the UK overall soft drinks market in the first six months of the year was down 0.7% in value and 0.4% in volumes, with volumes propped up by a 7% growth in bottled water. Carbonates were down 2.4% in volumes and almost 1% in value, the company said.

Releasing H1 results today, Barr said net profits dipped 1% to GBP13.2m (US$17.1m) while net sales fell 4% to GBP125.6m. Operating profits were up 1% to GBP17.4m in the six-month period.

The company's broadside at the UK governments sugar tax plans - announced this year and expected to be implemented in 2018 - claimed it was already pursing an "aggressive" policy of sugar-reduction. Barr said similar moves by its competitors meant a tax was unnecessary. 

"We believe this proposed tax is a punitive and unnecessary distortion to competition in the UK market which will be very complex, expensive and difficult to implement," it said.

The tax is expected to raise the price of a can of Coke in the UK by GBP0.08 and has been criticised by a number of soft drinks producers in the country. A report commissioned by the British Soft Drinks Association claims the tax could cost the UK 4,000 jobs.

The spectre of Brexit also hangs over UK beverage producers. Barr, which last month warned that Brexit costs are likely to hit next year, said today that the UK's decision to leave the EU will cost it as much as GBP4m in 2017 because of increased input costs.

Today's disappointing results for Barr came despite a 16% sales jump in its international arm, driven by continued expansion in eastern Europe for partner brand Rockstar. Funkin Cocktails, which Barr bought in early-2015, grew sales by 28%.

Looking ahead, the company said it expects positive FY profits growth before tax and exceptional items.

AG Barr's share price was down less than 1% as of 1036 GMT today.

Expert analysis

Soft Drinks (UK) - Industry Report

Soft Drinks (UK) - Industry Report

Plimsoll Publishing’s Soft Drinks (UK) Analysis provides a detailed overview of the UK Soft Drinks (UK) market and delivers a comprehensive individual analysis on the top 210 companies, including RED ...read more