Wednesday preview: AG Barr expected to reveal improved trading

31st Jan 2017 13:00

(ShareCast News) - Soft drinks manufacturer AG Barr is expected to reveal improved trading in the second half on Wednesday following a decline in revenue in the first six months.The Irn-Bru maker in September reported a 3.6% drop in first half revenue to £125.6m and flat pre-tax profit of £17m on the back of a "challenging customer and consumer environment" and poor weather in the early summer months. The group, however, achieved a strong performance in its Funkin cocktail mixer arm, boosted by distribution gain in the UK and the US.Numis said: "We believe that the aim of slight year-on-year pre-tax profit growth will have been achieved for fiscal year 16/17 versus last FY £41.3m (the year-end is end Jan) as: 1) trading in the first seven weeks of the second half was well ahead and although weather flattered this (industry soft drinks sales value was +9.7% for the 4 weeks to mid-August aided by the weak comparative as August 2015 was dire), it will be a help. 2) We sense new products fared well and expect Irn-Bru XTRA to be launched in England and Wales in 2017 there was a risk it might cannibalise sales of the existing sugar-free variant but it has seemingly attracted a younger range of drinkers. There should have been incremental sales from new products in the second half. 3) Funkin (cocktail mixers) should have remained strong first half sales were +28% aided by new products). 4) Whilst 25-28% of annual sales arise in the late November to Xmas period, there are no grounds to expect sales to have disappointed over the key 2016 festive season."Looking ahead, the broker said an issue for fiscal year 2017/18 is sterling's weakness and higher commodity costs. The guidance in September was for a 3- 5% increase in input costs due to the pound's decline.At the time, the company said it was addressing the higher costs with plans to cut 90 jobs as part of a three-year "business improvement" programme. The move is expected to save £3m per year from fiscal year 2017/18.The group is also preparing to tackle the government's drinks sugar tax on April 2018 by introducing low and no sugar products to the market. About 67% of the firm's portfolio will be low and zero sugar by 2018.AG Barr is likely to reassure investors on Wednesday of its progress on these changes to address the challenges facing the industry. Wednesday 01 February INTERIM DIVIDEND PAYMENT DATE Dart Group, KCOM Group, Mitie Group, Plastics Capital, United Utilities Group QUARTERLY PAYMENT DATE Mercantile Investment Trust (The) INTERNATIONAL ECONOMIC ANNOUNCEMENTS Construction Spending (US) (15:00) Crude Oil Inventories (US) (15:30) ISM Manufacturing (US) (15:00) MBA Mortgage Applications (US) (12:00) Q3 Wizz Air Holdings FINALS Low & Bonar EGMS Stanley Gibbons Group AGMS Artemis VCT, Future, Punch Taverns, Redhall Group, Tharisa (DI) TRADING ANNOUNCEMENTS Barr (A.G.) UK ECONOMIC ANNOUNCEMENTS BRC Shop Price Index (00:01) Nationwide House Price Index (07:00) FINAL DIVIDEND PAYMENT DATE BBA Aviation 5% Cum Prf, McCarthy & Stone, Schroder Asia Pacific Fund, Stride Gaming