AG Barr is shedding 90 jobs in a bid to save $3.9m (£3m) a year, as the UK soft drinks maker reiterates its opposition to the “punitive” sugar tax.
Pre-tax profits were up 25 percent to £21.1m ($27.4m), helped by AG Barr shutting its defined benefit pension scheme to new members, while revenues dropped 3.6 percent to £125.6m ($163m) in the six months to June 30.
The owner of Irn-Bru and Robinsons squash brands said it is expected to cut 90 jobs, equating to ten percent of its workforce, across commercial, supply chains and central functions.
It said the jobs cuts, which would cost £4m ($5.2m), would lead to £3m ($3.9m) in annual cost-savings.
AG Barr said it had been a solid first-half performance, amid a “challenging customer and consumer environment" while consumers were also put off from buying soft drinks in the early months.
A standout performer in the period was its Funktin cocktail business it bought in 2015, where revenues were up 28 percent in the period.
The proposed soft drinks tax, outlined in George Osborne’s Budget earlier this year, to help reduce obesity rates has been attacked by the soft drinks industry.
The industry believes it is “unnecessary” as the industry is reformulating and reducing sugar across its portfolio of drinks.
AG Barr said it “will participate fully in the process” but the tax is "punitive".
It added: “We believe our positive actions and sugar reduction progress, along with those of many of our competitors within the soft drinks industry, make the implementation of a soft drinks only sugar tax an unnecessary measure in the context of Government health policy objectives.”
Roger White, Chief Executive said: “We have delivered a solid first half performance, maintaining market share, improving our operating margin with a slight improvement in our pre-exceptional profit versus the prior year.”
“This is despite continued price deflation in the UK market, a challenging customer and consumer environment as well as poor weather in the important early summer months leading up to the end of the reporting period.”
“Good progress has been made across the key areas of innovation, product reformulation, brand development and operational efficiency. We will continue to focus on these areas throughout the second half of the financial year.”
“Following our significant investment in assets, infrastructure and systems, delivered through our Fit for the Future business improvement program, we are announcing the program's final phase, a business reorganisation which will create a faster, more efficient and leaner organisational structure.”
“We are beginning to see the benefits of our product development and innovation initiatives with both consumers and customers. Market conditions remain volatile and somewhat unpredictable however, assuming a strong trading performance in the key festive period, we remain on track to deliver profit (before tax and exceptionals) slightly ahead of last year.”