There’s a fizz in AG Barr sales as soft drinks group outperforms the market

The group, which dates back to 1875 and also makes Tizer and Rubicon, said sales grew 2.4 per cent in the 15 weeks to May 12, outperforming a flat soft drinks market that was hit by the prolonged cold spell.

Barr, which is based in Cumbernauld, near Glasgow, but has operations across the UK including in Sheffield, said it expects tough competition to continue into the summer as it awaits clearance from the Competition Commission on its merger with Robinson’s squash maker Britvic.

AG Barr added profit margins are on track and it continues to build its core brands. It told shareholders at its annual meeting in Glasgow: “Whilst it is still early in our financial year, our core brands continue to perform well despite the weather, economic challenges and significant increases in competitor promotional activity.

“As we now enter the key summer trading period we anticipate that the marketplace will remain highly competitive.”

It said it was making “excellent progress” with a new £41m plant in Milton Keynes and expects the new canning and logistics site to launch within eight weeks, creating up to 100 jobs.

Barr’s merger with Essex-based Britvic – which aims to create one of the leading soft drinks companies in Europe – has been on hold while the companies await clearance from the Competition Commission. It expects a ruling in early June.

Barr said the strategic attractions of the tie-up are unchanged. “The board will accordingly reconsider the transaction once the Competition Commission findings are available,” it said.

But Shore Capital analyst Phil Carroll said it believes Britvic “took some of the gloss off a potential merger” when it recently reported improved profits and up to 400 job cuts to save £30m.

As part of the cost-cutting measures, Britvic recently announced plans to close its factory in Huddersfield with the loss of 40 jobs. It also has a factory in Leeds.

Mr Carroll said the deal now looks “unlikely” to go ahead on its original terms.

Barr declined to comment further.

Wayne Brown, analyst at Canaccord Genuity, hailed Barr’s “very strong” first quarter trading.

He said: “Not only does this compare favourably to the market place which has seen flat revenues but signifies a material outperformance to Britvic.”

The group has produced Irn-Bru – dubbed Scotland’s other national drink – from a secret recipe for more than 130 years. AG Barr said earlier this year that profit before tax and exceptional items for the year to January 26 was £35m, up from £33.6m in 2012.

It grew revenues to £237.6m, up 6.6 per cent on a year prev- iously.