Barr on course despite merger delay

Irn-BruThe maker of fizzy drink Irn-Bru insisted it is "business as usual" after increasing profits in the face of uncertainty over its merger with Britvic.

AG Barr's tie-up with the Tango maker is on ice while the Competition Commission considers whether the £1.4 billion combination has an impact on prices.

Cumbernauld-based Barr believes there is a "compelling rationale" for the deal but said it was also working on existing plans to develop as a standalone business.

Announcing a 4.3% rise in underlying profits to £35 million for the year to January 26, chief executive Roger White said: "We remain confident in our future prospects both as a standalone business and combined with Britvic."

He pointed out that Barr was pressing ahead with the opening of a new production and warehouse facility at Milton Keynes later this summer.

Its sales revenues increased 6.6% to £237.6 million in the year, which it said was better than 2.9% in the wider market after double-digit growth in the second half. However, margins were slightly reduced due to the higher cost of raw materials.

The proposed merger deal would create one of the leading soft drinks companies in Europe, with other brands including the Britvic products Robinsons, J20 and Fruit Shoot. Barr, which dates back to 1875, also makes Rubicon and Ka exotic drinks.

The two firms began talks in the summer but their progress was halted in February when the Office of Fair Trading referred the matter to the Competition Commission. If they get the go-ahead, then the boards of both companies will reconsider the terms of a deal.

Canaccord Genuity analyst Wayne Brown is optimistic of a successful outcome from the competition investigation.

"However, even as an independent company the outlook remains strong and we suspect the first half performance of this year will exceed expectations," he added.