AG Barr expecting H1 sales to have topped up by a fifth

Irn-Bru maker AG Barr is expecting its first-half revenues to have increased by nearly a fifth, although it also flagged challenges around its UK road haulage fleet affecting deliveries, and the impact of Covid on availability of staff.

The Cumbernauld-based business said in the trading update that revenue for the 27-week first half is expected to be about £134 million, about 18 per cent ahead of the prior year. On a like-for-like, 26-week basis, sales are expected to be up about 13 per cent.

The firm, which will report its interim figures next month, said trading has been strong across both of its business units, Barr Soft Drinks and Funkin. “This performance has been driven by a combination of brand-led initiatives and market factors, some long-term and structural and others more one-off, resulting in a short-term boost to operating margin, which we would not expect to be replicated in H2,” it added.

It added that the past six months have seen recovery in “on the go” consumption, growing volume and improving product mix, and at-home sales have continued to fizz.

The business was boosted by a visit to its Cumbernauld factory by the Queen in June. Picture: Andrew Milligan/Getty Images.

The business – which in June welcomed the Queen and the Duke of Cambridge to its factory – said recent product launches are performing well, while the energy sub-category continues to outperform the total soft drinks market. AG Barr plans to accelerate its commercial investment in Rubicon RAW Energy across the balance of the second half.

It added that in recent weeks it has seen increased challenges partly associated with the pandemic across the UK road haulage fleet, affecting customer deliveries and inbound materials. “In addition, the risks associated with the wider labour pool and the current Covid-19 pandemic response are areas we continue to monitor closely.”

AG Barr reiterated its guidance from July 20 that profit for the current 53-week financial year ending January 30 2022 is expected to be slightly ahead of the performance in the 52-week year prior to Covid-19, when pre-tax profit amounted to £37.4m. It had in March reported a 30.5 per cent slide in statutory pre-tax profits to £26m for the year to January 24 as sales fell 11.2 per cent to £227m.

The firm has also now noted that it remains committed to its plan to restart dividend payments in the current financial year.

Momentum

Chief executive Roger White said: “We are pleased with the performance of the business in the year so far. There is good momentum behind our core brands and we have re-entered the growing big can energy category with our Rubicon RAW Energy range.

“We plan to increase our brand investment in the second half of the year, building on our progress to date. While uncertainty remains, we are confident in delivering our plans across the balance of the year and meeting our recently revised full-year profit expectations.”

Analysts Darren Shirley and Clive Black at house broker Shore Capital said: “AG Barr is a high-quality business in our view, with a top-quality management team, a very well-invested manufacturing infrastructure, a great stable of British brands with strong regional positions, attractive margins and excellent cashflow dynamics that support an already very strong balance sheet (net cash £72m forecast) that provides management with considerable optionality.”

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