Irn-Bru maker AG Barr flags higher profits but warns over inflation and return scheme
The iconic Scottish soft drinks firm said the positive sales momentum reported in the first half of 2022/23 had continued across the balance of the financial year, with full-year revenue growth expected to be in the region of 17 per cent on a reported basis and about 15 per cent on a like-for-like basis. That would indicate annual revenues of around £315 million. The prior financial year included an extra week's trading, while revenue for the year ended January 29, 2023 was strengthened by an eight-week contribution from the Boost brand, which was acquired by the group in early December, and a full-year lift from porridge brand Moma.
In a trading update ahead of March’s full-year results, Cumbernauld-based Barr said the newly acquired Boost sports energy drink and Moma businesses will provide further room for growth as they develop both their consumer base and customer distribution. All four business units within the group - Barr Soft Drinks, Boost, Funkin and Moma - contributed to the strong revenue performance.
It told investors: “As anticipated, the inflationary backdrop across the UK continued across the second half of our financial year. We have remained focused on supporting our employees, customers and consumers alongside taking positive action to mitigate the inflationary cost pressures. We are pleased to confirm that we anticipate delivering a full-year profit performance ahead of the prior year, and slightly ahead of current market expectations.”
Barr added: “Looking ahead into the 2023/24 financial year we anticipate further revenue growth across the group with a continuation of our strong brand momentum. This is despite a backdrop of continued high inflation and the planned introduction of a deposit return scheme in Scotland in August 2023, both of which have the potential to impact consumer behaviour. While we expect there to be an impact on operating margin as a result of inflationary cost pressures, and a short-term dilutive impact from the Boost acquisition, we will continue to invest in the long term growth of our brands. At this early stage in the year we remain confident of delivering further profit growth in the year ahead in line with management expectations.”
Chief executive Roger White said: “We have accelerated the development of the business, further building our portfolio of differentiated brands with the acquisition of Boost and taking full ownership of Moma. As we enter a new financial year we are well placed to continue to develop and grow through our clear and consistent value-driven strategy.”
Analysts at house broker Shore Capital noted: “AG Barr’s trading update for the 52 weeks ended January 29 makes for encouraging reading to us, confirming a continuation of strong trading momentum through [the second half], resulting in raised full-year profit guidance. A continuation of cost headwinds and consumer uncertainty into [the new financial year] come as no surprise, and do not alter our view that AG Barr is a high-quality business, with an attractive brand portfolio building medium to long term growth prospects and ambitions.”
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