Irn-Bru maker AG Barr cheers Covid profit rebound in surprise investor update
Irn-Bru maker AG Barr has put some fizz into its shares after flagging better-than-expected profits.
The Cumbernauld-based soft drinks maker said recent trading had been better than anticipated, driven by a combination of factors, including pubs and restaurants restocking as coronavirus restrictions were relaxed.
Bosses pointed to “underlying brand momentum”, such as the positive performance of recent product launches. The hot spell will have also provided a sales lift.
In a brief, unscheduled trading update, Barr said it now expects profit for the current 53-week financial year, to the end of January 2022, to be slightly ahead of the performance delivered in the 52-week year prior to Covid, when it generated a profit before tax of £37.4 million.
The group is due to provide further information at its scheduled first-half trading update on August 3.
Analysts at house brokerage Shore Capital noted: “We warmly welcome this unscheduled update from Barr, a very high quality business that has had to face into the major headwinds of Covid – and the loss of the Rockstar business.
“Fundamentally though this is a great business with top-quality leadership, first-class manufacturing facilities, great British brands with regional position and authority, including Scotland’s own Irn-Bru, strong margins, excellent cash flow and a fine financial backbone.
“We would imagine that recent visitors to the group’s Cumbernauld base, Her Majesty Queen Elizabeth II, and the Duke of Cambridge, will also be delighted to see today’s news.”
In May, Barr noted that sales at its core soft drinks business had been “relatively strong” since the start of the new financial year. That was despite lockdown restrictions being in place across much of the first quarter.
“As lockdown restrictions have eased we have seen a positive impact on both our sales volume and mix, with a shift back towards ‘drink now’, hospitality and leisure,” it told investors in an update to coincide with its annual general meeting (AGM).
The trading momentum has been supported by “encouraging” new product launches – Rubicon Raw Energy in particular achieving “promising” initial customer listings and consumer feedback.
The firm, which is also behind the Strathmore and Funkin brands, added: “While the pace and extent of the reopening of the hospitality sector varies by region, our Funkin business is already beginning to see the benefits, delivering on-trade sales that provide optimism for the sector’s recovery.
“Current trading is encouraging and we have clear plans to further invest in our brands, with exciting consumer engagement and marketing activity planned across the year.”
The AGM update came after results at the end of March showed that annual profits had fallen by nearly a third amid the pandemic.
The group 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 revenue figure had been confirmed in a trading update in January.
Sales across the pubs and hospitality sector plummeted due to repeated lockdowns and trading restrictions during the pandemic and the group was unable to offset this despite surging trade at supermarkets and convenience stores.