By Victoria Masterson
IRN-BRU maker AG Barr has revived investors with the promise of better-than-expected annual profits – after a miserable 2019 hit by poor weather, the sugar tax and controversial recipe changes.
Shares in the Cumbernauld-based soft drinks business jumped more than 15% after it said it expected underlying pre-tax profits at the top end of market expectations, ‘just ahead’ of £37 million for the year to 25 January. The shares closed up 15.3% at 627p, despite expected lower sales for the year of around £255m versus £279m the previous year.
“It’s been a difficult year and we’re looking forward to the new year,” said AG Barr chief executive Roger White. “We’ve been through quite a tricky period of consumer confidence, political turmoil and consumers not being certain about what’s happening in the UK economy. Perhaps 2020 will have more certainty.”
The company, which also makes drinks including Rubicon and Tizer, warned last July that full-year profits would be up to 20% below expectations, with a range of unusual factors having an impact. AG Barr had reformulated 99% of its portfolio into sugar-free recipes ahead of the sugar tax being introduced in April 2018. But some customers complained about the new tastes.
Drinks makers also suffered from a European shortage in 2018 of CO2 – the gas used to carbonate soft drinks – which led to some operators reducing promotional activity or temporarily suspending production.
And the summer of 2018 was reported to be the hottest in 40 years, with comparatively poor summer weather in 2019, particularly in Scotland, flattening sales. The company said moves to hike prices may also have dented sales, but it has now brought its pricing in line with rivals.
In a trading update, AG Barr said Irn-Bru returned to growth in the last three
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