Rubbish weather and the falling value of the pound left a bitter taste for Irn Bru maker AG Barr, an update has revealed.
The Cumbernauld firm said it expects like-for-like revenue in the six months ended July 30 to have fallen by 2.9% year-on-year to £125million.
Nevertheless the soft drinks company, which produces brands including Rubicon and Strathmore water, said it expects to meet its profits target for year end “assuming market conditions improve and our robust second-half plans deliver”.
It said the first half of its financial year was “challenging” and “highly competitive”, faced with continued deflation and volume declines.
It pointed to market research data which showed value and volume fell in the six months to 19 June 2016. It added: “indications are that the poor weather across the full month of June and into July will further adversely impact the total market performance.”
Phil Carrol, an analyst with Shore Capital said: “We note that the UK soft drinks market declined by 7.5% alone in June according to Nielsen data resulting in a highly competitive market but on a positive note, in our view, Barr states that it has maintained both volume and value overall market share.”
The company set out how it is getting ahead of a proposed “sugar tax”, announced by former UK chancellor George Osborn in his March budget and which is still on track to come into force in 2018.
In the half year, Barrs launched a new “zero sugar” Irn Bru drink product as well as two other lower/no sugar Rubicon products and three Snapple Iced Tea flavours reformulated to not have added sugar, which it said are all showing encouraging early signs with customers.
In its trading update yesterday, it also underlined how the vote to leave the European Union was set to increase its costs next year.
It said the vote “has resulted in a degree of economic uncertainty and a weakening of Sterling”.
It added: “The impact of weaker Sterling will not have a significant impact in 2016, but it is anticipated input costs will increase in 2017, providing management time to adjust plans accordingly.
“The balance of the summer will remain an important trading period, however assuming market conditions improve and our robust second half plans deliver, we expect to meet our profit expectations for the full year.”.