IRN-Bru manufacturer AG Barr is on course for another solid rise in annual profits, after revealing its sales revenues in the latest 18 weeks were up 5.6% on the same period of last year.
Roger White, chief executive of AG Barr, revealed that Irn-Bru, the company's Rubicon exotic juice drink range, and its Barr-branded soft drinks remained the "critical" drivers of sales growth. These three core brands, he noted, accounted for about three-quarters of AG Barr's revenue stream.
AG Barr told the stock market yesterday, as it revealed it continued to achieve significant sales growth in spite of the weak consumer climate and intense competition in the soft drinks sector in terms of pricing and promotions, that it anticipated "delivering" its full-year expectations.
The City is forecasting AG Barr will make underlying pre-tax profits of £33.3m in its current financial year to January 2012. This would represent a significant rise from a comparable figure of £31.6m in the year to January 29, 2011. The company made underlying pre-tax profits of £27.9m in the year to January 2010.
AG Barr, which is continuing its marketing push for Irn-Bru in the north of England as well as in this soft drink's Scottish heartland, said revenues in its financial year to date were up 4.6% on the corresponding period a year earlier.
Asked about the faster year-on-year pace of increase in revenues in the latest 18 weeks, Mr White said comparative revenues for the second half of the last financial year were "slightly less tough" than those for the first half. And he cited "marginally better" weather this summer.
AG Barr said that it had "continued to outsource a limited volume of production to ensure customer service levels were met during the key summer months". The company has invested £10m in its bottling plant at its headquarters site at Cumbernauld on the outskirts of Glasgow, and transferred some production there from Mansfield. Mr White highlighted the process of increasing the manufacturing line speed to the required level following the investment at Cumbernauld.
However, he emphasised that AG Barr provided the "essences and all the materials" for any outsourced production.
Asked if this ensured no-one outside the company knew the "secret" recipe for Irn-Bru, Mr White replied: "Absolutely right. Correct. All under wraps as ever."
Mr White cited intense price competition involving manufacturers and retailers of soft drinks as AG Barr entered the key Christmas trading period, but emphasised this was no worse than the company had seen earlier in the year and in past festive seasons.
He highlighted AG Barr's continuing efforts to push sales through marketing, as opposed to deep price discounting.
In this regard, he noted that AG Barr's "Snowman" advert, based on the animated musical of this story but featuring a small boy being dropped out of the sky by the snowman and landing in deep snow after refusing to share his Irn-Bru and having it "nicked", was back on television this festive season.
AG Barr employs about 960 people. Mr White noted about half of this workforce was in Scotland.
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