Promotions hold back Barr profit growth

27th Sep 2011 07:29

AG Barr, the maker of the orange fizzy drink IRN-BRU, posted flat profits in the half year to July 31 despite higher revenues amid strong promotional activity.Pre-tax profits for the period excluding exceptional items rose to £16.2m from £16m on total turnover that climbed by to £124m from £119.2m. The company paid an interim dividend of 7.3p a share, up from 6.75p the previous year."We are pleased to have delivered financial performance in line with our expectations," said chief executive Roger White."This is a particularly positive result given the challenging comparatives we faced in the first half of the year, the relatively poor summer weather, which has impacted the soft drinks market and a competitive market backdrop."Barr said that promotional activity increased "as brand owners and retailers sought to pass on price increases on the one hand but increased promotional activity to maintain market share on the other."Barr, whose brands include the exotic drink Rubicon as well as the Scottish favourite IRN-BRU, intends to invest in a new production site in the south of the UK. "The board believes that investment in a new production site in the south of the UK is now a viable and important next step in our future development. As such, we will confirm our specific plans in due course but anticipate investing in a new site with canning capacity along with the potential for additional PET capacity."---RG