Beverage giant A.G Barr PLC (LON:BAG) posted a 5.5% increase in first-half revenue despite the impact of a Co2 shortage, sugar tax on soft drinks, extremes in the weather and weak consumer confidence.
The company, which produces Rubicon, Irn-bru and Strathmore drinks brands, said revenue rose to £136.9mln in the six months to July 28 from £129.8mln a year ago, driven by a 7.2% rise in volume. Profit before tax and exceptional items grew 4% to £18.2mln from £17.5mln last year. The operating margin fell to 13.4% from 13.9%, reflecting investments in core brands and new products.
"We have delivered a solid financial performance in the first half of the financial year, navigating through the soft drinks industry levy implementation, reformulation, extremes of weather and CO2 shortages in addition to a dynamic consumer, customer and macroeconomic environment,” said chief executive Roger White.
“Our core brands have performed well and have good momentum with both consumers and trade customers.”
The so-called Beast from the East, which brought heavy snowfall from Siberia to the UK and across Europe in February and March, hurt first-quarter trading.
A record-breaking hot summer boosted demand in the second quarter but a shortage of Co2 gas affected the supply of soft drinks for a number of weeks.
READ: AG Barr predicts solid half-year revenue growth as hot summer boosts soft drinks market
In the second half, the company expects a moderate impact on margins as it continues to invest. AG Barr said it remains on track to meet full-year expectations.
The interim dividend was raised by 5% to 3.90p from 3.71p last year. Share buybacks in the first half amounted to £6.2mln, bringing the total for the year to date to £14.4mln. The share buyback programme is on course to be completed in May 2019.
The group ended the period with a net funds position of £4.2mln, compared to £7.9mln last year, as free cash flow fell to £9.4mln from £20mln.
Shares fell 1.2% to 721p in morning trading.
House broker Shore Capital said: "We believe the results highlight a strong trading performance during what has been a challenging and volatile marketplace."
It added: "We leave our forecasts unchanged with the margin reduction already taken into account and we continue to expect Barr to deliver a further year of progress."