Irn-Bru buys majority stake in former Wales striker's firm
The Barr portfolio was also expanded with the acquisition of energy drinks Boost in a deal worth up to £32m in December 2022.
However, the company took the decision to axe its Strathmore bottled water brand in March this year. It announced today that it has concluded the sale of the Strathmore brand and the Forfar production site to Ty Nant, 'negatively impacting revenue in the short-term but not profit'.
A filing at Companies House shows that AG Barr chief executive Euan Sutherland and finance chief Stuart Lorimer were appointed directors of Innate-Essence earlier this month.
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Barr noted today that the deal for Innate-Essence was 'consistent with the company's strategy of acquisitions and innovation in high growth, health focused, functional beverage categories', adding: 'The investment has been funded from the company's net cash position. It is not expected to have a significant impact on revenue or profit in the current financial year.'
The deal was announced as Barr signalled that it expects revenue to increase by around 3% to in the region of £228 million in the first half, with adjusted operating margin to be ahead of last year at 15% versus 13%. It anticipates the margin improvement will be driven by 'improved manufacturing efficiencies, ongoing benefits from our strategic business improvement initiatives and continued disciplined cost management'.
Barr noted that momentum had increased as the period progressed, with several record volume weeks reported in the second quarter.
It said brand performance was led by Boost, which delivered double-digit percentage growth. Sales of Irn-Bru and fruit juice brand Rubicon were flat in the first half, with a stronger performance in the second quarter, while growth in the off-trade for Funkin helped to mitigate challenges in the on-trade.
Mulling the outlook, the company made no changes to its revenue and profit expectations for the full-year.
Mr Sutherland said: "We are pleased to report continued revenue growth and strong profit growth in the first half of the financial year. Trading improved during H1, and we enter H2 with strong momentum and continued progress on margin improvement as our strategic initiatives continue to deliver. I am also excited about our expansion into the functional beverage segment working alongside Thomas Robson-Kanu and the Innate-Essence team. Our full year guidance remains unchanged and in line with market expectations."
Analysts at Shore Capital reiterated their expectations for the company to deliver an adjusted pre-tax profit of £65m for the full year.
Barr said: 'We have made excellent progress with operating margin during H1 and expect to deliver a full year result in line with expectations after taking into account a planned higher level of marketing activity in H2.'
Shares in AG Barr closed down 2.16%, or 15p, at 680p.
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