A.G. Barr reports decent trading after introduction of sugar tax

Drinks manufacturer A.G. Barr issued a pre-close trading update for the financial year ending 26 January on Friday, reporting a continued positive performance across the period, with revenue expected to be 5% higher year-on-year at £277m.

The FTSE 250 company, which owns brands including Irn-Bru and Rubicon, put that growth down to “strong” trading execution across its core brands, and continued success of its “key innovation”, leading to further market share volume gains in the UK soft drinks market, which itself saw volume up 3.0% and value increasing by 8.0%.

It said the impact of the soft drinks industry levy - the so-called ‘sugar tax’ - was evident across the UK soft drinks market, with value growth “significantly outstripping” volume in the period.

“Having taken the opportunity to drive our volume growth during this period, we expect to return to a more value-led trading strategy in 2019,” the Barr board said in its statement.

Throughout the year, it said the company had remained committed to investing across its brands, assets and people which, while supporting growth, had a “moderate” impact on its operating margin.

Its tight control on costs was maintained, and its balance sheet remained “robust”.

Barr said the £30m share repurchase programme had continued, and it now expected it to complete during the course of 2019, slightly later than previously indicated.

For the financial year ending 26 January, the board said it remained confident of delivering profit ahead of the prior year, and in line with its expectations.

“Looking ahead, the current political and economic uncertainty in the UK looks set to continue,” the board said of the firm’s outlook.

“For the soft drinks industry, further regulatory intervention is on the horizon and consumer dynamics continue to evolve.

“Our strong and flexible business model, our portfolio of differentiated and growing brands and our well-invested and efficient asset base give us confidence for continued profitable growth as we enter a new financial year.”

A.G. Barr said it intended to announce its full-year financial results on 26 March.