AG Barr sees revenue decline in ‘disappointing’ first half

AG Barr has seen revenue for the six months to 27 July 2019 decline from £136.9m in H1 last year, to £122.5m, following what it described as an “unprecedented year” for the soft drinks industry in 2018.

Last year saw a combination of factors including complex changes to pricing and promotional dynamics in the market following the introduction of the Soft Drinks Industry Levy, and significant impact on demand and supply, related to CO2 shortages, and a long, hot summer.

While AG Barr’s strategy was to place volume performance ahead of value, in order to take advantage of these circumstances, it admitted that, in hindsight, it underestimated the volume benefit volume benefit it received in 2018 from both one-off trading factors and favourable weather.

“This, combined with some specific brand challenges, saw a deterioration in financial performance as per the revised market guidance issued in the pre-close trading update on 16 July 2019,” it said.

The group said the first half performance had been “disappointing”, with profit before tax and exceptional items at £13.9m, compared to £18.2m last year, while statutory profit before tax was £13.5m, compared to £18.2m.

The group, which produces and markets drink brands, including IRN-BRU, Rubicon and Funkin, said it remained on course to deliver a full year performance in line with its revised expectations.

Strategic highlights included the launch of launch of IRN-BRU Energy in July, which has had encouraging initial trade and consumer response, the performance of Funkin – particularly in new ready to drink nitro-infused cocktail cans, and the minority investment in zero proof spirits brand Stryyk, announced earlier this year.

Roger White, chief executive, said: “Our focus remains on delivering long-term growth. We have plans in place to address our specific brand related challenges and are ensuring that the business is appropriately scaled to perform in the current market. Despite continuing economic uncertainty we expect to meet the revised profit expectations communicated in July.”

AG Barr also announced today that Martin Griffiths, current chair of the audit and risk committee and senior non-executive director, will stand down at the company’s board meeting on 19 March 2020.

Nick Wharton, who will have been on the board over a year at that point, will succeed Griffiths in the role of audit and risk committee chair and Susan Barratt will become senior non-executive independent director.

In addition, following a board structure review aimed at improving long-term corporate governance compliance, the supply chain director, currently an executive director role will move to a divisional director role and will continue to be held by Andrew Memmott. He has stepped down from the board with immediate effect.