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AG Barr toasts forecast of 7% jump in revenues

IRN-Bru manufacturer AG Barr is predicting a 7% jump in full-year revenues to about £253 million, after another market-beating performance in its final quarter.

CONTROL: Roger White of AG Barr will be chief executive of the enlarged Barr Britvic Soft Drinks after the two companies merge. Picture: Chris James
CONTROL: Roger White of AG Barr will be chief executive of the enlarged Barr Britvic Soft Drinks after the two companies merge. Picture: Chris James

AG Barr's shares surged 26.5p or 5.1% to 546.5p – increasing its stock market worth by about £31m to £638m – on the back of its upbeat trading update yesterday.

It highlights the strong position from which the Lanarkshire-based company is going into its planned £1.7 billion merger with larger Hertfordshire-based rival Britvic.

Roger White of AG Barr will be chief executive of the enlarged Barr Britvic Soft Drinks. He has been chief executive of AG Barr since 2004, having joined in 2002.

AG Barr, which cited the part its "Irn-Bru gets you through" advertising campaign had played in supporting its flagship brand, told the stock market it expected to have outperformed the overall UK soft drinks market in the final quarter of its financial year to January 26. It anticipates that total sales in its final quarter will be up more than 5% on the same period of its prior financial year.

In the quarter to January 28, 2012, AG Barr's total sales had been up more than 12% on the same period of the financial year to January 2011.

Analysts highlighted the fact AG Barr's sales growth in its latest quarter had thus been achieved against strong comparative year-earlier figures.

Commenting on its performance in the current quarter to January 26, which takes in the all-important festive trading period, AG Barr said: "The performance in the final quarter is particularly pleasing given the double-digit [percentage] year-on-year growth in the same period last year."

It declared all of its core brands would show increased sales in the year to January 26, in spite of "very poor" summer weather and a competitive market-place.

It added: "Irn-Bru performed well in challenging conditions with a very positive consumer response to the 'Irn-Bru gets you through' marketing campaign."

This campaign included the "Say Hello to Baby" and "Pink Bomb" television adverts, and featured people dealing with tricky and sometimes hilarious situations by drinking a can of Irn-Bru.

AG Barr said its Rubicon exotic fruit juice drinks and its KA brand, which is based on original Jamaican soft-drink recipes, had "continued to build on strong prior-year performances".

It added that the Barr brand of carbonated soft drinks had maintained its performance in terms of double-digit percentage growth in sales.

AG Barr declared the Rockstar brand, which it produces under a franchise agreement, had seen a "step-change" in its performance during the financial year, benefiting from the buoyancy of the energy drinks category and "strong trading execution".

The company said its operational performance had "improved across the financial year".

The City is forecasting AG Barr's pre-tax profits for the year to January 26 will be around £33.9m.

If achieved, this would represent a slight increase on the underlying figure of £33.6m for the year to January 2012.

The company said: "AG Barr has delivered a robust performance in a marketplace impacted by the combination of very poor summer weather and the ongoing economic challenges faced by consumer goods companies, notably raw material cost pressures and inconsistent consumer demand."

Mulling the outlook, it added: "It is unlikely these challenges will materially change. However, we remain cautiously optimistic that the combination of our proven operating model, continued focus on efficiency, strong brand equity, sound balance sheet and growth potential leave us well placed to continue to build on this performance."

The anticipated date for the merger with Britvic to become effective is February 26.

The Office of Fair Trading's target date to rule on the merger is February 13.

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