AG Barr boosts dividend as Rubicon and Irn Bru sales grow

Drinks business AG Barr has reported a strong set of half-year results thanks to higher demand for its core soft drinks offering despite weak summer trading conditions and a dip in revenue from its cocktail arm.

Barr, which owned the Irn Bru and Rubicon brands, reported a 5.2 per cent increase in revenue to £221.3m in the 26 weeks to 27 July 2024, up from £210.4m in the same period of 2023. 

Adjusted profit before tax rose by 8.5 per cent, from £27m to £29.3m, while the company’s operating margin increased by 0.5 per cent to 13 per cent. 

The company hiked its interim dividend by 17 per cent to 3.1p per share.

It ended the period with a net cash balance of £43.7m.

Revenue growth was driven by the soft drinks segment, which grew seven per cent in the half.  The Rubicon and Irn Bru brands delivered double-digit growth in both volume and value, Barr said. 

Despite the negative effect of poor summer weather on sales, the UK soft drinks market grew by two per cent in the first half of the year. The company said the growth has been price-led.

However, its cocktail offering, Funkin, fared less well, with revenue down 9.4 per cent year on year to £21.1m. Barr bought Funkin in 2015 in a deal worth around £21m. 

Chief executive Euan Sutherland said: “I am pleased to report a strong set of first half results. The business has delivered both revenue and profit growth as well as good progress on our key strategic margin rebuild programme.

We continue to invest in our supply chain to build the capacity to support our growth plans and manufacture more volume in-house.  This will deliver tangible benefits including enhanced margin and improved service resilience.”

Barr said it anticipated a strong second-half performance from its four core brands – Irn Bru, Rubicon, Boost and Funkin – with “current trading momentum underpinned by further marketing and innovation activities”. 

The company incurred a one-off cost of £4.4m related to the closure of Barr Direct and the integration of Boost, it said. It also acquired the soft drinks brand Rio on 23 October for £12.3m. 

Full-year guidance remained unchanged.