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AG Barr buoyed by Irn-Bru sales

The maker of Irn-Bru has produced market beating full-year figures
March 27, 2018

Rising sales of AG Barr’s (BAG) flagship Irn-Bru brand mirrored those of the group in the period under review, which is slightly surprising given that the iconic beverage now contains about half of the sugar content of the original recipe. The drink, highly favoured in Scotland, now contains a range of artificial sweeteners which has brought it below the five-gram (per 100ml) threshold at which the government’s new sugar tax takes effect in April – canny work.

IC TIP: Hold at 637p

We don’t know if the uptick in sales was due to a last-minute rush by traditionalists to consume the remaining stores of the auld sticky concoction before its sugar content was reduced last year, but whatever the reason, investors will raise a glass to a solid set of full-year figures, with gross profits up 8 per cent to £131m, on a 20-basis point increase in the underlying margin. That said, the Cumbernauld-based drinks company still had to contend with continued weakness in sterling, which bumped up euro-denominated costs for sugar and transportation. The reformulation process and consumer surveys have added to one-off costs, but virtually the entire product portfolio now falls below the sugar tax threshold.  

JPMorgan Cazenove gives adjusted profits of £48m for the year ending January 2019, leading to EPS of 32.9p, against £44m and 29.8p in 2018.

AG BARR (BAG)   
ORD PRICE:637pMARKET VALUE:£731m
TOUCH:637-639p12-MONTH HIGH:685pLOW: 540p
DIVIDEND YIELD:2.4%PE RATIO:20
NET ASSET VALUE:176p*NET CASH:£14.9m
Year to 27 JanTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201425434.324.411.0
201526138.626.012.1
201625941.329.613.3
201725743.130.814.4
201827844.932.315.55
% change+8+4+5+8
Ex-div:10 May   
Payment:8 Jun   
*Includes intangible assets of £105m, or 91p a share