AG Barr first-half profit falls on higher costs

Sept 24 (Reuters) - Scottish soft drinks maker AG Barr Plc reported an eight percent fall in half-year profit as higher sugar costs and increased brand investment ate into margins.

The company, which is in advanced talks to merge with larger British rival Britvic Plc, said the talks are ongoing.

AG Barr, best known for its bright orange Irn-Bru drink and exotic juice brand Rubicon, said it expected trading to remain challenging in the second half of the year.

However, it recorded double-digit percentage growth in sales in the first seven weeks of the second half.

Pretax profit fell to 14.9 million pounds ($24.22 million) in the six months to July 28 from 16.2 million pounds a year earlier.

Revenue rose about 5 percent to 130 million pounds. Carbonated drink sales increased 5.5 percent, while sales of still drinks rose 1.8 percent.

AG Barr's shares closed at 451 pence on the London Stock Exchange on Friday.