Last year we wondered whether the uptick in Irn-Bru sales and, by extension, group revenue at AG Barr (BAG) was linked to customer loyalty, with punters stocking up on the bright orange fizz ahead of the sugar tax-linked reformulation of Scotland's other national tipple. Now, after extensive reformulations, around 99 per cent of the company’s portfolio is exempt from the soft drink levy. But Irn-Bru still increased its volume share of the UK carbonates market by 4.2 per cent with its new recipe, thus contributing to the 8.9 per cent increase in carbonates sales and a 6.4 per cent improvement in the gross profit.
In addition to the sugar tax, AG Barr had to contend with the CO2 shortage, and extreme weather in both summer and winter. The company also prioritised volume over profitability – at least in the short term – by spending on marketing and promotional activity. As a result, the operating profit margin before exceptional items declined by 66 basis points to16.4 per cent. However, net operating cash flow remains a compelling feature of the investment case, up 5.7 per cent to £44.6m.
Analysts at Investec expect adjusted pre-tax profits of £46.6m during the year to January 2020, giving EPS of 33.2p, compared with £45.2m and 32p in FY2019.
| AG BARR (BAG) | ||||
| ORD PRICE: | 766p | MARKET VALUE: | £872m | |
| TOUCH: | 766-768p | 12-MONTH HIGH: | 821p | LOW: 614p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 184p* | NET CASH: | £21.8m | |
| Year to 26 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 261 | 38.6 | 26.0 | 12.1 |
| 2016 | 259 | 41.3 | 29.6 | 13.3 |
| 2017 | 257 | 43.1 | 30.8 | 14.4 |
| 2018 | 264 | 44.9 | 32.3 | 15.6 |
| 2019 | 279 | 44.5 | 31.5 | 16.6 |
| % change | +6 | -1 | -2 | +7 |
| Ex-div: | 9 May | |||
| Payment: | 7 Jun | |||
| *Includes intangible assets of £103m, or 91p a share | ||||
