Irn-bru maker shrugs off Brexit risk as profits rise

● AG Barr chief says weaker pound is biggest Brexit issue for soft drinks giant

The maker of Irn-bru has flagged an “unprecedented” level of uncertainty stemming from the UK’S looming withdrawal from the European Union as it reported a rise in annual profits.

However, Cumbernauldbased AG Barr, which also produces Rubicon fruit juices, Strathmore water and Tizer, insisted that Brexit would not have a major impact on its business – aside from the weaker pound, which is driving up raw material costs.

Chief executive Roger White told The Scotsman that 96 per cent of the group’s revenues are generated in the UK, “so the biggest issue for us is the relative rate of sterling, which given its decline over the last 12 months has led to a slightly different cost profile”.

He added: “We’re starting to see inflation in costs coming through, and that is pulling the market from the deflationary environment we’ve been in for some time into something that looks like it will have a modest bit of inflation in it.”

Regarding the prospect of a second independence referendum, White said: “We’ll let the politicians deal with the issues associated with that and we’ll continue to focus on our soft drinks business and giving consumers what they want.”

His comments came as Barr posted a 2.7 per cent increase in pre-tax profits, before oneoff items, to £42.4 million for the year ending 28 January, on underlying revenues 1.5 per cent higher at £257.1m.

The group, which ended the year with almost £10m of cash on its balance sheet, also announced plans to return up to £30m to shareholders over the next two years through a share buyback scheme.

It hailed a “strong” performance among its core brands, with sales of Irn-bru up 3.2 per cent in the year and Rubicon rising 4.9 per cent.

In response to changing consumer tastes, the group recently made a commitment that 90 per cent of its brands will contain less than 5g of total sugars per 100ml by the autumn, and analysts at Barclays said: “This means most of the group’s portfolio will not be subject to the UK’S new sugar tax regime due for introduction in summer 2018.”

White added: “We’ve been developing our portfolio long before there was any governmental intervention; we’ve been listening to our consumers and they have been telling us increasingly that they love our products but they want to consume a little less sugar.

“The essence that’s at the heart of the [Irn-bru] brand isn’t going to change – all we’re doing is using a little less sugar. When Robin Barr himself, who’s been making Irn-bru for over 50 years, can’t tell the differencethenweknowwe’reon to a good thing.”

In September, Barr unveiled plans to axe about 100 jobs in an effort to save some £3m a year, and the firm, which has 60 per cent of its workforce north of the Border, said yesterday that the bulk of those cuts have now been made at a one-off cost of £3.3m.

Barr’s board proposed a 9 per cent hike in its final dividend to 10.87p, to be paid on 9 June.