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AG Barr sparkles as sales rise in England

THE summer heatwave has sent sales at Irn-Bru maker AG Barr fizzing as the Cumbernauld firm posted figures showing it is shrugging off its failure to complete the takeover of larger rival Britvic.

LOT OF BOTTLE: The AG Barr management team is confident about prospects for the festive season. Picture: PA
LOT OF BOTTLE: The AG Barr management team is confident about prospects for the festive season. Picture: PA

AG Barr, headed by chief executive Roger White, recorded an 8% rise in revenues in the 18 weeks to December 1.

Volumes increased by a healthy 6.4% compared to the same period last year, with the remainder of the revenue boost coming from price rises.

The company has prospered by convincing English shoppers of the merits of its flagship orange brew. At the same time it has expanded the market for the exotic juice lines it acquired when it bought Rubicon in 2008 beyond their core market with ethnic minority consumers.

This has led to the company outperforming the wider market. In the year to date its revenue is up 6.7%, with volume ahead 5.1%. Industry data shows that the wider market increased in value by 4.1% and volume by 3.1%.

This suggests that AG Barr is bouncing back from what some analysts saw as a relatively weak performance in the first half to its financial year.

AG Barr said: "Our brands continue to perform well and in the period, our margins have been in line with our expectations."

Some in the City believe that this means AG Barr's profit margins have expanded although others think they are likely to have been affected by increased marketing spend to grow sales.

There was little change in the City's profit expectations for the year.

AG Barr said its balance sheet remains strong and little changed from when its position when it announced its six months results in September. At this point it had net debt of £15.8m, which is expected by analysts to fall to around £12m by the end of its financial year.

Its sales growth has been helped by the start of production at a new £34m facility at Milton Keynes, north of London and it is planning to expand its operations there.

"Our operational delivery over the last few months has been supported by the strong performance of our new site at Milton Keynes," the company said.

"We are progressing well through the plant commissioning phase and have completed the logistics transfer programme on time.

"The second phase of our site investment at Milton Keynes is now under consideration."

Phil Carroll, analyst at Shore Capital said: "The financial performance has benefitted from the new factory in Milton Keynes coming on-stream and it is performing ahead of expectations.

"It has a new canning line in place and management state the second phase of development is now under consideration.

"We believe this is both ahead of its original target and it is likely that a PET (plastic bottle) line is next on the agenda."

AG Barr's management team is positive about the company's prospects over the festive season despite a cut-throat high street.

"The soft drinks market remains highly competitive as we enter the important Christmas trading period," the company said.

"We are now executing our strong seasonal trading plans and remain confident of delivering our full-year performance expectations despite tough year-on-year trading comparatives."

Damian McNeela, analyst at Panmure Gordon, wrote in a note for clients: "Our assertion remains that AG Barr is a well-run company, with a strong balance and continues to deliver against its organic growth strategy."

AG Barr came close to agreeing a reverse takeover of Robinsons squash owner Britvic after getting its board's backing for a deal. But after a delay in approval by the competition authorities, it was unable to hammer out a new agreement with Britvic.

Its total bill for the aborted takeover amounted to £4.9m, AG Barr disclosed in September.

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