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Analyst hails Scottish firm for setting A.G Barr high

By Ben Bouckley , 10-Dec-2012

Picture Copyright: Alisdair/Flickr

Picture Copyright: Alisdair/Flickr

One City analyst has hailed UK soft drinks firm A.G Barr for 'outpacing the market' with volume growth in the 18 weeks to December 1, but warned that the nation's soft drinks market remained extremely competitive ahead of the key Christmas trading period.

While it outpaced industry volume growth with 6.6% volume growth in a flat market averaging 3.3% growth (Nielsen data) Barr also grew turnover 9% - with performance driven by its major brands and well-timed promotions for top brand Irn-Bru ('Bru Island) in the second half of 2012/13.

Maintaining a 'hold' rating on Barr's stock, analyst Damian McNeela from Panmure Gordon said in a note this morning that he also adhered to his existing forecast of 2% profit before tax growth to ₤34.3m ($55m) for Barr's fiscal year ending January 2013, alongside 5.6% revenue growth to ₤250.3m.

Nonetheless, McNeela warned that promotional activity in the lead up to Christmas remained intense. He noted that, while Coca-Cola was promoting three two litre PET bottles for ₤3 and Britvic's was selling two litre PET bottles at half price, Irn-Bru was currently being offered at two bottles for ₤2.50.

With construction of a new factory in Milton Keynes well underway - ahead of scheduled completion in August 2013 - McNeela said he saw no reason why the UK Office of Fair Trading shouldn't approve A.G Barr's planned merger with Britvic by mid-January.

The merger is then due to take effect from January 31 2013.

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