1st Feb 2017 10:55
LONDON (Alliance News) - AG Barr PLC on Wednesday said it expects to report a slight fall in revenue in its recently-ended financial year, but said it is on track to meet profit expectations as it warned that 2017 will be "another challenging year".
The soft drinks maker, which makes brands including Strathmore water and Rubicon juice drinks, said revenue in the year ended January 28 is expected to be around GBP257 million, which is a slight decline on the GBP258.6 million made the year before.
However, like-for-like revenue is expected to grow by 1.5% year-on-year.
AG Barr has been struggling to grow sales in recent times, due to a deflationary market which has seen increased competitive pressure among AG Barr and its peers.
The market has also been faced with changes in consumer behaviour, as customers become more health conscious, shifting preferences away from beverages which are high in sugar to those which are low in sugar or sugar free.
In the face of this, AG Barr has been reformulating and innovating some of its products, aiming for two-thirds of its portfolio to have low or no sugar by 2018.
On Wednesday, AG Barr said the UK soft drinks market remained "highly competitive" in 2016, although its trading performance strengthened in the second half supported by "successful product innovation", specifically through the launch of IRN-BRU XTRA and Rubicon Spring, both of which contain no added sugar.
The company noted that it has maintained "tight" control of costs through its "company-wide reorganisation" which has both "enhanced" its organisational ability and reduced the overhead base.
This involved the loss of around 90 jobs across its commercial, supply chain and central functions, which it said last year would result in an ongoing annual benefit of GBP3 million following an initial GBP4 million one-off cost.
As a result of its cost-cutting initiatives, AG Barr said operating margin remains in line with expectations for the full year and that it will meet profit expectations.
AG Barr added that it will invest GBP10 million into its Milton Keynes facility to improve efficiency and flexibility.
"Looking ahead the uncertain economic environment indicates that 2017 will be another challenging year for UK based businesses. However our strong and flexible business model, our differentiated brands and our well-invested asset base ensure we are well placed to continue to deliver long-term value to shareholders," AG Barr said in a statement.
AG Barr will announce its full-year results on March 28.
Shares in AG Barr were trading up 2.6% at 515.00 pence on Wednesday morning.
By Karolina Kaminska; [email protected]; @KarolinaAllNews
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