Improved distribution and investment in marketing meant soft drink maker AG Barr was perfectly positioned to take advantage of the early-summer heat, with sales growing at twice the 7 per cent rate seen across the UK soft drinks market.
The star performer was its Rubicon business, acquired in August 2008, which grew like-for-like sales by 37 per cent - thanks in part to a £5m sponsorship of Sky's cricket coverage this summer, tapping into Rubicon's strong customer base among ethnic communities. However, much effort has been put into extending the appeal of all of Barr's brands, including Irn Bru which once again saw good growth outside of its Scottish heartland. Sales of the cult drink grew at 8 per cent, with good market share gains in the North of England.
Impressively, the strong financial performance was achieved against a backdrop of significant operational change within the group, which meant it incurred double running costs of around £500,000 as it switched to a new third party distributor. However, chief executive Roger White said that these costs would end this year, and expects annualised efficiency savings of £1m to kick in when manufacturing is consolidated at a single site in early 2011.
Altium Securities expects full-year pre-tax profits of £31m and EPS of 57.5p (from £27.9m and 53.3p in 2010).
AG BARR (BAG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,251p | MARKET VALUE: | £487m | |
| TOUCH: | 1,251-1,255p | 12-MONTH HIGH: | 1,355p | LOW: 711p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 267p* | NET DEBT: | 19% | |
| Half-year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 105 | 13.5 | 25.66 | 6.25 |
| 2010 | 119 | 15.4 | 29.24 | 6.75 |
| % change | +14 | +14 | +14 | +8 |
Ex-div: 6 Oct Payment: 22 Oct *Includes intangible assets of £75.9m, or 195p a share | ||||
