Hot spell boosts Barr's prospects: Dearer sugar takes its toll on profits

THE RECENT hot spell in the South of England has given A G Barr, the maker of Irn Bru and Tizer, hope that sales of soft drinks will improve as the summer wears on.

But an 18 per cent rise in the price of sugar following devaluation of the pound and the fall in value of the green pound dented profits at Barr, which made pounds 2.1m before tax in the six months to 1 May. The pounds 3m profits in the equivalent period the previous year were, however, inflated by an exceptional gain of pounds 409,000 from the sale of an investment in Taveners.

But Barr gained from an interest charge 38 per cent lower, the impact on borrowings of the cash from the Taveners sale and the inherent cash generation of the business.

Robin Barr, chairman, said that the weather was hugely important for soft drinks sales. 'Unfortunately the recent good weather seems to have stopped at Watford, while our products are stronger in Scotland and the North of England,' he said.

'Sales in the nine weeks since 1 May are down about 10 per cent, but we are not despairing because the comparable period last year was very good. But then the weather was very poor in July and August, so we are hoping sales will be at worst neutral.'

Irn Bru is the second biggest brand in Scotland after Coca-Cola, and Mr Barr said the company was now directing its marketing more at the South of England.

Barr had now passed on some of the sugar price increase, but fierce price competition made it impossible to recoup the loss in margin fully.

The company is investing about pounds 750,000 in a production line in Glasgow to produce new 250ml plastic bottles of Irn Bru to cope with higher- than-expected demand.

Turnover was 1 per cent lower at pounds 42m. Earnings per share fell to 7.7p (10.7p) and the shares stuck at 365p.