Irn-Bru Shows Its Strength

January 27, 2012, 9:22 am

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Shares in soft drinks manufacturer AG Barr rose three per cent after its latest trading update.

The company said it expected sales to be five per cent higher in the first quarter and growth for the full year could be as high as 12 per cent.

Demand for its core drinks such as Irn-Bru and Rubicon have remained high and it is on track to meet its trading expectations for 2012.

In a statement the company said:

"The performance in the final quarter is especially pleasing given the strong comparative period in the prior year, the significant operational challenges posed by weather in late November/December and the greater promotional intensity experienced in the market.

Across the financial year all of our core brands have performed strongly. IRN-BRU has performed well in its core market as well as delivering excellent growth in the North of England, where additional resources have been focused. Rubicon has grown revenue over the year by over 30% and is now a brand with sales of circa £50m, around double the sales at the time of our acquisition.

The Barr carbonates range has extended distribution across the UK and is growing significantly ahead of the market.

Despite the operational challenges of the final quarter and increases in raw material costs we anticipate margins will be in line with our expectations.

The investment in our Cumbernauld operation is progressing well and we now anticipate final production from the Mansfield site in March. The Mansfield site has now been sold and will be cleared during the course of March and April and fully vacated in June 2011.

Over the period our free cashflow generation and Balance Sheet have remained strong, with net debt reducing in line with expectations. "

Broker Collins Stewart said in a briefing note that the company had an exceptionally strong balance sheet.

"This is yet another strong trading update which highlights market share gains," it said.

Investec said: "In summary, Barr is set to report another solid set of results despite several challenges and we feel it is well-placed as it enters the next financial year."