Irn Bru maker AG Barr has cheered a growing following for its brands outside of Scotland, but revealed the impact of Brexit-fuelled costs and investment in advertising as half-year profits fell 8%.
The group, which is also behind Rubicon and Tizer, saw bottom line pre-tax profits fall to £19.4 million in the six months to July 29 from £21.1 million a year earlier despite an 8.8% surge in revenues.
It said cost pressures from the Brexit-hit pound and spend on marketing for its brands hit profit margins, although these were lessened by recent moves to hike prices and overhaul its business, which involved cutting 10% of its workforce.
Cumbernauld-based AG Barr hailed a “particularly pleasing” sales performance in England and Wales after a concerted push to increase sales south of the border.
AG Barr is reducing the sugar content of brands across its stable
It added that sales in Scotland have also been boosted by its recent no added sugar range.
Roger White, chief executive of AG Barr, said: “While we maintain tight cost control across the business, we have increased investment in the support of our brands and innovation launches and expect to continue this across the full year.”
Soft drink sales were given a fillip across the industry by this year’s early summer heatwaves, but AG Barr said the cooler weather since then has impacted sales.
Mr White said despite the hit from the “mixed weather since late July”, the group remains on track for the full-year.
On an underlying basis, the group’s half-year pre-tax profits edged 2.9% higher to £17.5 million.
AG Barr has been leading a revamp to reduce the sugar content of some of its best known brands ahead of a government crackdown on the fizzy drinks industry.
It said it was “making good progress” to ensure over 90% of its brands will contain less than 5g of total sugar per 100ml by next January.
AG Barr is grappling with a shift in consumer tastes towards low-sugar drinks and is preparing for the implementation of a sugar tax in 2018.
The proposed levy, due to be introduced in April 2018, is aimed at tackling soaring obesity rates.
The industry tax relates to the sugar content of drinks, with a higher amount charged for the most sugary beverages.
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