Irn-Bru-maker AG Barr expecting effervescent full-year profits

AG Barr, which manufactures Scotland's other national drink Irn-Bru, has revealed that its profits for the year are expected to beat market forecasts after strong sales continued in recent months.

The Cumbernauld-based business, whose other brands include Rubicon, said sales since September "have grown ahead of our expectations" – and it is the second time it has upgraded its profit guidance in the last four months.

It said it has been boosted by positive trade in the "on-the-go" and hospitality markets, while recent product launches have also performed better than forecast.

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The drinks firm has been buoyed by the return of more normal habits as people head back to offices in city centres, as well as the recovery of bars and restaurants in recent months.

The Queen touring AG Barr's factory in Cumbernauld earlier this year. Picture: Andrew Milligan/POOL/AFP via Getty Images.
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AG Barr told investors that its production and supply chain has remained resilient and supported recent growth despite the "challenging supply-chain environment".

It added: "As a result of our continued strong volume performance and despite ongoing near-term operating cost pressures, we now anticipate both revenue and profit before tax for the full year to be ahead of current market expectations.”

The business said revenues are expected to be around £264 million for the year, with a forecast pre-tax profit of around £41m, assuming no significant changes to market conditions.

The London-listed firm added that the pandemic "remains a risk" but highlighted that it expects the strong sales momentum to continue in 2022.

Wayne Brown, equity analyst at Liberum, said: "Another upgrade two months before year-end suggests a high degree of confidence and more to come is now highly likely."

Analysts Darren Shirley and Clive Black of house broker Shore Capital Markets said the unscheduled trading statement “makes very encouraging reading in our view” – adding that “with an exciting portfolio of brands underpinning attractive margins” as well as “sustained” cash generation, and a balance sheet “that provides considerable optionality... there is much to like in the AG Barr investment case”.

AG Barr, which can trace its roots back to 1875, in September unveiled interim results, with total sales seeing a year-on-year jump of 19.5 per cent to £135.3m.

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Pre-tax profits were up nearly four-fold from £5.1m to £24.4m, while the firm announced a recommencement of dividends, but it also flagged facing supply-chain challenges amid a shortage of lorry drivers.

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