AG Barr

A solid interim performance to July from pop drinks group AG Barr in the first half, in the face of a major reorganisation of its distribution system, suggests a bumper full year lies ahead.

Profits before tax and exceptionals from the company that sells such drinks as Irn Bru, Orangina and St Clements, increased by 8.2% to £9.4 million on sales up 8.9% at £72.2 million. The interim dividend was boosted by 0.50p to 10.25p per share.

Chief executive Roger White says the diet drinks division suffered a slight year-on-year decline from which he expects it to recover in the second half. The acquisition of Strathmore mineral water has gone to plan and will eventually profit from its planned programme of investment. He also mentions that a new range of drinks for schools has been launched to comply with the regulations set down in a new Government white paper.

Wading into an energy drinks market awash with Red Bull, the sovereign of stimulatory slurps, Barr’s orange offering, Irn Bru 32, contributed five million cans in five months to a 3% progression in total Irn Bru sales, ahead of expectations. An increased marketing push in the second-half should see ever more improvement.

As the restructuring is predicted to boost operating profits £2.5m a year, house broker Investec forecasts £18.7m pre-tax for the full year, rising to £21m in 2008, producing earnings per share figures of 68.8p and 76.7p. This means the shares, last recommended by Growth Company Investor at 951.5p in February, are available for 16.8 and 15.1 times forward earnings. With Barr in all the right areas, it is still worth adding to your holding.