23rd Sep 2014 07:30
LONDON (Alliance News) - Scottish soft-drinks maker AG Barr PLC Tuesday said an increase in volume and strong demand for its Strathmore water brand and its iconic Irn Bru drink, drove an increase in its first-half profit and revenue, and also announced a new 10-year franchise deal to sell the Snapple brand in the UK and EU.
The Irn Bru maker declared a 10% increase in its interim dividend to 3.11 pence per share, after it posted a pretax profit of GBP16.5 million for the six months to July 27, up from GBP13.2 million a year earlier, buoyed by a 5.4% increase in revenue.
Revenue in the first-half rose to GBP135.7 million, up from the GBP128.7 million in revenue generated in the first-half of last year, boosted by 6.2% growth in volume, largely deriving from its Strathmore water brand, which it said benefited from increased distribution, innovation and further sector growth. In value terms, carbonates grew by 4.5% and still drinks by 6.3%, AG Barr said.
Looking into the second-half of the year, AG Barr said it expects market conditions to remain both "dynamic and challenging."
"We have traded well across all channels and have benefited from the excellent execution of our Commonwealth Games sales and marketing plans. Market conditions across the soft drinks category and general consumer environment are challenging, however we plan to maintain our increased levels of investment in our brands, people and assets across the rest of the year and we remain confident in the long term potential of the business," said Chief Executive Roger White in a statement.
In a separate statement Tuesday, the Scottish company said it has signed a 10-year deal with Snapple Beverage Corp, a subsidiary of the Dr Pepper Snapple Group, giving it the exclusive rights to sell, market and distribute the Snapple brand in the UK and several other EU countries.
AG Barr said the agreement will commence in January 2015, and it will also work in partnership with Snapple for further expansion opportunities in European markets where Snapple is not currently available.
"Snapple is... very successful in the United States and we strongly believe in the significant potential of Snapple in Europe," White said in the statement.
AG Barr, the producer of other drinks brands including Tizer and Rubicon, said it continues to invest in increased levels of marketing, innovation and consumer promotional activity.
"In the period, we have seen our gross margins and operating margins improve by around 100 basis points as we benefited from the efficiencies related to volume growth and improved cost control," the company said.
AG Barr shares were trading 0.6% lower Tuesday morning, at 628.00 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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