Wet summer weather puts a damper on Barr profits

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The Independent Online
A COMBINATION of poor summer weather, higher sugar prices and the supermarket price war sent profits at AG Barr, the soft drinks company, down by a third.

Barr's best-known product is Irn Bru, advertised as being made in Scotland from girders. Taxable profits for the year to 30 October fell from pounds 7m to pounds 4.7m.

Robin Barr, the chairman, said: 'The weather is always the single most important factor. Last year was terrible.'

Cold and damp conditions in June, July and August exacerbated pricing problems with the supermarkets. Mr Barr said that if a product was selling well, stores pushed price considerations below supply needs. However, the poor weather meant shops were well stocked and price pressure was maintained.

Most of Barr's product is sold under brand names, but about 10 per cent of its output goes for sale in own-brand lines. Mr Barr said that own-brand production fell because Barr lost contracts to competitors willing to offer prices that Barr considered unacceptable.

Mr Barr added that own-brand sales were suffering from the entrance of tertiary brands - lines that undercut own-brand prices.

The company was also hit by the rising cost of sugar after sterling's exit from the exchange rate mechanism, which had inflated and kept prices artificially high.

Earnings per share dropped from 21.6p to 15.5p. The dividend was unchanged at 6.5p. Shares, which peaked at 402p last April, fell 5p to 305p yesterday.

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