IRN-BRU-to-Strathmore water maker A.G. Barr (BAG) beats expectations with a 10% annual pre-tax profit rise to £41.9 million despite fiercely competitive market conditions. There's also a 10% dividend hike to cheer, though the shares are off 4.5p at 672.5p as a cautious outlook prompts profit-taking following a strong run.
You can drill down into Glasgow-headquartered A.G. Barr's impressive and resilient annual results in full here. Highlights include double digit pre-tax profit growth, driven by efficiency gains and sustained investment behind differentiated brands, top-line growth ahead of a challenged UK soft drinks market and an increase in return on capital employed (ROCE) to 24%.
All the group's core brands showed revenue progress in the year ended 25 January. IRN-BRU, Barr, Rubicon and Strathmore water, the latter's outstanding year boosted by rising brand awareness due to A.G. Barr's sponsorship of the Glasgow 2014 Commonwealth Games, each outperformed a more lacklustre soft drinks market, where price competition among retailers is having an impact.
A.G. Barr delivered growth across Scotland, England and Wales last year while also developing its portfolio into areas where it sees long-term growth potential. Last month's (2 Feb) acquisition of Funkin for up to £21 million takes it into the high-growth cocktail mixer sector and follows the forging of a Snapple brand partnership with Dr Pepper Snapple, under which Barr will develop the brand in the UK and Europe.
CEO Roger White (pictured above) does however issue a mixed outlook statement though. He says 'overall market conditions are expected to remain challenging', with the UK soft drinks market 'currently experiencing a period of price deflation which will, if sustained, make it more difficult for many businesses to deliver the top line growth of recent years.' A.G. Barr's financial year is off to a slow start, reflecting tough first half comparatives and 'promotional phasing', referring to the ramp up in marketing spend and promotions ahead of the Commonwealth Games.