25th Mar 2014 14:14
LONDON (Alliance News) - Scottish soft-drinks maker AG Barr PLC Tuesday reported increased revenue and profits for 2013, driven by strong growth in its fizzy drinks such as Irn Bru and Barr.
The producer of drinks brands including Tizer and Rubicon continued to warn that it expects tough competitive market conditions to continue, but Chief Executive Roger White gave a cautiously confident outlook for the year ahead, as the group raised its total dividend for the year by 10% to 11.02 pence per share.
"We're cautious just because the consumer environment remains tricky and the retail environment is quite dynamic at the moment. We are confident in our prospects, but we are operating in some challenging market places, with some big competitors," White told Alliance News after the release of the company's financial results.
For the 12 months ended January 26, the group reported a 6.9% increase in revenues to GBP254.1 million, up from GBP237.6 million a year earlier, which drove its pretax profit for the year up 8.5% to GBP34.3 million, compared with GBP31.6 million the prior year.
It said it margins improved during the year, reflecting improvements in the cost of goods, controlled overheads and as it sold a bigger proportion of more profitable drinks.
AG Barr said that it increased it marketing and promotional spend in the year, a figure it said will rise again in the current financial year as its continues to invest in the business.
"We operate in a very competitive sector, which has always been very promotionally driven. During the year we continued to spend heavily and incrementally year-on-year on marketing and promotions," said White.
White said this included brand building activity such as advertising, offers, digital media work and price promotions.
The soft-drinks maker said its core brands - Irn Bru, Barr, Rubicon and its franchise energy brand Rockstar - delivered total revenue growth of 8% and outperformed the market during the year.
AG Barr said the group's overall performance was driven by strong growth in carbonated drinks, which grew by 8.2% in overall value, while its still drinks portfolio had a more subdued year, growing by 2.7% in overall value terms.
"For stills it has been more competitive, in particular for fruit juices, where in market terms water and flavoured water have performed better, trends we can see continuing into this year," White told Alliance News.
AG Barr said that sales in Scotland now account for 40% of its total revenue.
The soft-drinks maker has said over the last few quarters that it is now focused on organic growth rather than acquisitions, following its failed merger with rival Britvic PLC in July last year.
Japanese drinks company Suntory last year bought the Lucozade and Ribena brands from GlaxoSmithKline, and AG Barr's Orangina contract, which is due to expire at the end of 2014, will transfer into the new Suntory Lucozade Ribena operation.
"Orangina is a franchise brand that we have operated for a number of years. The contract was due to come to an end at the end of this year, and we will hand it back to the brand owners in due course," said White.
AG Barr said that it does not anticipate that the transfer will have any material impact on either its operational or financial performance going forward due to the relatively insignificant scale of the brand, its revenues and gross profit generation.
During the year, the company completed phase 1 of its new production and warehouse facility at Magna Park in Milton Keynes, a project it set GBP42 million aside for. It said it is now fully operational, and has enabled the group to increase capacity, with the can line and associated processes fully commissioned.
White said that the group is now working on Phase 2, and is reviewing what packaging formats it wants to invest in.
The company said it held net debt at the end of the period of GBP2.1 million, having reigned this in significantly from GBP25.6 million a year earlier, as it generated a very strong cash flow amounting to GBP37.7 million.
AG Barr shares were trading 2.1% higher Tuesday afternoon, at 594.00 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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