Poor summer weather takes some of the sparkle out of Irn-Bru maker

Irn-Bru maker AG Barr revealed plans to expand production in England yesterday after announcing flat half-time profits yesterday because of the poor summer weather and tough economic backdrop.

Chief executive Roger White, unveiling underlying pre‑tax profits of £16.2 million in the six months to end‑July against £16m last time, said: “In soft drinks the weather is always a factor. The summer weather was poor this year, particularly in Scotland, and it has had an effect.” Meteorologists have said this summer was the chilliest for 18 years.

However, White was upbeat about prospects even though he said there was unlikely to be any change in the challenging trading environment in the second half. Soaring raw materials costs included a 20 per cent jump in the period in both sugar for the company’s drinks and plastic.

Irn-Bru, based in Cumbernauld, north Lanarkshire, hoisted the dividend over 8 per cent from 6.75p to 7.30p in what White said was a sign “of our confidence in the financial well-being of the business and our capacity to grow and thrive”.

The group also confirmed expansion in the south of the UK to meet growing demand for its range of soft drinks, which include the eponymous stalwart Irn‑Bru, Tizer, Rubicon and Caribbean‑influenced Ka.

Barr said its recent growth meant plans to increase capacity had been brought forward and that a new production site in the south of the UK was now a “viable and important” step forward.

The firm, which shut a factory in Mansfield earlier this year, gave no details of the likely location of the new plant but said it will initially double its cans output.

“The majority of our growth has come out of the rest of the UK [other than Scotland] and we intend to invest there,” White said. “We have not alighted on a specific site yet, but I would hope that within 18 months we have the extra production.”

Analysts said Barr had the cash to fund a major expansion, which could also release some pressure on the Cumbernauld plant.

Irn-Bru’s turnover in the period rose 4 per cent to £124m, with the performance better in the second quarter, up 5.1 per cent.

Higher sales of fruit drink range Rubicon and Ka offset a sluggish half for Irn-Bru, where sales fell 1.2 per cent, as Barr battled against hefty price promotions by its soft drink rivals. Group volumes rose 1.4 per cent, but White said that although AG Barr lifted prices 2.6 per cent, the company was not in the vanguard of promotional wars.

Rubicon, which sponsors cricket’s t20 tournament, increased sales 8.8 per cent despite passing on higher fruit prices, while Ka sales jumped 72 per cent following the launch of Ka stills.

Wayne Brown, an analyst at Collins Stewart, added that the first half sales growth was “commendable” when set against comparable growth of 14 per cent a year ago.

AG Barr’s shares closed up 22p, or 1.8 per cent, at 1,210p.