Cost savings are offsetting rise in raw material costs
Soft drinks maker AG Barr has reported a 4.3 per cent rise in first quarter sales.
The maker of Irn-Bru said sales were up in 14 weeks to May 5 compared to last year, despite a cold start to the spring and a “challenging soft drinks market in general”.
Barr said the outlook on material cost pricing “has not altered in recent months” and expects material costs will continue to rise “mid single digit” this year.
The Cumbernauld-based company said pricing changes and cost efficiency plans already in place will support longer term cost control.
Raw material costs rose by 5.5 per cent overall in 2011, which led to a a fall in gross margins from 51.6 per cent to 50.6 per cent.
Barr said in an interim management statement today: “We have started the new financial year with all of our core brands performing well in difficult market conditions.
“During the course of the period the unseasonal weather for the time of year has impacted the market and a period of more normal conditions will now be required to bring the market back into growth.
“Despite the challenges of current market conditions and continued low consumer confidence, the business is performing in line with our expectations”.
Barr posted a 6.2 per cent rise in pre-tax profits for the 2011 year to £33.6 million on a turnover rise of 6.6 per cent to £237 million.
The company closed its plant in Mansfield last year – axing 100 jobs - to focus on investing in expanding production capacity at its Cumbernauld plant.
Barr said today it was making “good progress” in its investment plan to increase operating capacity at its Milton Keynes plant.
The company said it is continuing to invest in TV and digital advertising of its core brands, including the launch in early May of the first national television adverts for Rubicon fruit juices.