AG Barr, United Dairy Farmers and Devro post trading updates

Irn-Bru manufacturer AG Barr’s sales were down 0.4% compared with last year. First-half sales dipped to £125M, down 2.9% year-on-year, on a like-for-like basis.

The company blamed the weakened pound and adverse weather. 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.”​

City analyst N+1 Singer said: “Post yesterday’s disappointing ​[first half] trading update, we lower our three-year forecasts by 5–​6%.​

“Whilst there is much to admire about AG Barr, recent evidence points to a business which is displaying hallmarks of being ex-growth. We are sellers, down to 475p.”​

Better fortune​

United Dairy Farmers, parent company of dairy brand Dale Farm, had better fortune as the company reported a good recovery following a dip in 2015. Annual group operating profit increased from £3.5M to £9M, and profit before tax reached £6.82M from £1.28M.

United Dairy Farmers Group chief executive David Dobbin hailed Dale Farm as the driver behind the boost in fortunes. “Dale Farm has delivered another year of strong volume growth, especially in consumer cheese and whey protein products.​

“However, overall turnover was down due to depressed market returns.”​ The company reported a drop in turnover of 12.2% to £370M.

United Dairy Farmers touched on Brexit in its statement. It said: “The outlook for the current year remains challenging with Brexit adding to market volatility and uncertainty. ​[However], the United Group is in sound financial shape with increasing profit and a falling level of debt.”​

On target​

Meanwhile, Devro reported an increase in operating profit of £2.4M compared with the first six months of last year. Revenue remained unchanged and the company remained on target for its full-year expectations.

Devro chief executive Peter Page said: “Improved manufacturing efficiencies, lower input costs and exchange rate benefits more than offset the effects of reduced year-on-year sales volumes.​

“The next stage of strategic development will focus on growing sales through improved commercial capabilities, introducing the next generation of differentiated products and further improving manufacturing efficiencies.”​

Analyst N+1 Singer reacted to Devro’s trading update: “Today’s interims are a curate’s egg. It is reassuring that Devro has navigated what was always going to be a tricky ​[first half] given various volume pressures.​

“Whilst our fundamental investment thesis around profit recovery and a stronger emerging market story has not changed, the delay in evidencing a return on the large investments is clearly disappointing, especially given leverage.”​