Sales Down At A.G. Barr As Consumer Shun Sugary Drinks; Cutting 10% Of Workforce

A.G. Barr has posted disappointing half year results and announced plans to cut around 10% of its workforce as part of its ‘Fit for the Future’ restructuring plan.

During the 6 months ended 25 July, the soft drinks group saw its total revenue drop 3.6% to £125.6m with like-for-like sales declining 2.8% amid the consumer shift away from sugary drinks. A.G. Barr said that its lower and no sugar products had performed better as consumers responded to the “significant weight of negative media coverage pointed towards added sugar products, particularly in the last 6 months.”

It added that it was making good progress in reformulating its drinks range with recent innovations such as IRN-BRU XTRA and Rubicon Spring, both of which contain no added sugar, performing well at this early stage.

The group’s international business performed well with revenue up 16%. A.G. Barr expects this growth momentum to continue, supported by a further territory extension agreement with its partner Rockstar, signed earlier this month, covering the Russian Federation.

Pre-tax profits jumped 25% to £21.1m, although the boost was due to the company closing its defined benefit pension scheme to new members, without which profits were flat.

Meanwhile, A.G. Barr revealed that it was cutting around 10% of its workforce as part of the final phase of its three-year ‘Fit for the Future’ restructuring programme designed to create a “faster, more efficient and leaner organisational structure”. The company said around 90 jobs will go across its commercial, supply chain and central functions.

Commenting on the results, Roger White, Chief Executive said: “We have delivered a solid first half performance, maintaining market share, improving our operating margin with a slight improvement in our pre-exceptional profit versus the prior year. This is despite continued price deflation in the UK market, a challenging customer and consumer environment as well as poor weather in the important early summer months leading up to the end of the reporting period.

“Good progress has been made across the key areas of innovation, product reformulation, brand development and operational efficiency. We will continue to focus on these areas throughout the second half of the financial year.”

He added: “Market conditions remain volatile and somewhat unpredictable however, assuming a strong trading performance in the key festive period, we remain on track to deliver profit (before tax and exceptionals) slightly ahead of last year.”