UK: AG Barr upbeat over H1 results despite profits slip
- Net profits decrease by 6.9% to GBP11.6m (US$18.8m)
- Net sales increase by 4.9% to GBP130m
- Operating profits down by 7.4% to GBP15.6m
- Rubicon brand grows volumes by 6% in declining market
AG Barr posted its first-half results today (24 September)
AG Barr has increased sales by both value and volume in its first-half results, but saw rising costs bite into profits.
Net profits for the six months to the end of July fell by 6.9% to GBP11.6m (US$18.8m), the Scottish soft drinks maker said today (24 September). Net sales increased by 4.9% to GBP130m over the same period while operating profits dropped by 7.4% to GBP15.6m.
Cost of goods increased by 5.9% to GBP65.8m, driven by higher sugar prices, while a higher H1 marketing spend also hit margins. However, volumes were up by 2.8% against a total take-home soft drinks market that increased by 2.2% in sales value but fell 1.5% in volumes.
“We are particularly pleased with our financial performance, given the ongoing challenging trading environment,” said company CEO Roger White. “We have continued to outperform, delivering further consistent growth in volume and value ahead of a market which has seen volume declines in the period. In addition we have maintained investment in the long-term equity of all of our core brands.”
The company, which is in talks with UK rival Britvic over a possible merger, said carbonates sales grew by 5.5% and stills posted a 1.8% increase. Core brands Irn-Bru, Barr and Rubicon “maintained strong market positions and grew market share”, the company said. Fruit drink Rubicon posted a 6% volumes increase over the same period last year despite an overall 5% decline in the sector in the UK, which was badly affected by poor weather.
Looking to the remainder of its fiscal year, AG Barr said it remains cautious over its second-half performance, but added that sales in the first seven weeks of H2 have shown double-digit growth.
An analyst said that results signalled “meaningful market share gains” for the company.
However, “despite a strong top line performance, margins were impacted by the combined effects of increased raw material costs, adverse channel (multiple growth versus impulse) and a heavier weighting of marketing activity in H1,” Canaccord Genuity said in a note.
AG Barr said a further announcement on its Britvic talks will be made when appropriate.
To read the company's official statement, click here.
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