Irn-Bru maker AG Barr warns deliveries hit by supply chain issues and driver shortages

Irn-Bru maker AG Barr is facing supply chain challenges amid a shortage of lorry drivers, impacting delivery of Scotland's other national drink.

Revealing record financial results, the iconic soft drinks maker warned of “increased challenges” in recent weeks and said it continues to "monitor closely" the situation.

Updating the stock market, bosses said: "In recent weeks we have seen increased challenges across the UK road haulage fleet, associated in part with the Covid-19 pandemic, impacting customer deliveries and inbound materials.

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"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 is behind one of Scotland's most famous products, the iconic Irn-Bru soft drink.AG Barr is behind one of Scotland's most famous products, the iconic Irn-Bru soft drink.
AG Barr is behind one of Scotland's most famous products, the iconic Irn-Bru soft drink.

Chief executive Roger White said many of the supply issues were “structural” and outwith the company’s direct control but stressed that the firm was “so far managing its way through” the crisis.

He said the upcoming Christmas period would be far from normal but said the business was as “well placed as it can be”.

The cautious outlook came as the company revealed sales remained strong despite the pandemic, with growth returning following the reopening of pubs, bars and restaurants.

Bosses said there had been a heavy shift to at-home drinking of their products but with restrictions easing more customers are buying drinks on-the-go and in the hospitality sector.

Its pre-mixed cocktail brand Funkin saw some of the strongest growth in the 27 weeks to August 1 compared with a year ago.

In the half-year period, total sales jumped 19.5 per cent to £135.3 million compared with the same period a year ago.

Pre-tax profits were up nearly four-fold from £5.1m to £24.4m - impacted by a £7m writedown on the Strathmore water brand recorded in results last year.

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The firm also announced a recommencement of dividends, comprising an interim dividend of 2p per share plus a one-off special dividend of 10p per share.

Cumbernauld-headquartered Barr highlighted its strong balance sheet with £65.6m of net cash at bank.

White said profit growth would cool in the second half of the financial year but the full-year outcome would be strong.

He said: "AG Barr is a growth-focused business operating in resilient and growing market categories, with dynamic brands, great people and a strong financial position.

"Our positive first-half performance reflects these fundamentals as well as the encouraging performance of recent innovation launches in both soft drinks and cocktails.

"We remain on track to deliver strong full-year profit performance, slightly ahead of our 2019/20 pre-Covid level."

John Moore, senior investment manager at Brewin Dolphin, noted: “AG Barr has delivered a strong set of results, buoyed by the performance of its brands – particularly Funkin – the return of ‘on the go’ sales, and a warm summer.

“The business took prudent action during the pandemic to protect its balance sheet, which is reflected in the amount of cash it holds today. The recommencement of dividends, along with the payment of a special dividend, points to the management team’s confidence – but there are challenges ahead, not least in the well-publicised form of supply chain shortages.”

Shares were down about 3 per cent at midday.

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