Irn-Bru sales surge amid 'exceptional British summer weather' but outlook more cloudy
Irn-Bru maker AG Barr has reported a surge in sales amid the summer sunshine but warned of an “increasingly challenging” backdrop as prices continue to rocket.
Issuing an update on recent trading, the firm flagged revenues of about £157 million for the first half of its new financial year, which would mark a year-on-year rise of 19 per cent, measured on a like-for-like basis.
Bosses said the strong revenue performance reflects the “continued positive momentum” across all business units - Barr Soft Drinks, Funkin and Moma Foods.
The Cumbernauld-based group told investors: “Our growth has been driven by ongoing brand investment and the successful execution of our pricing and promotional activity. Trading performance further benefited from the year on year Covid recovery across the market, particularly in the on-trade and out of home sectors, as well as the exceptional British summer weather in recent weeks.”
But it added: “We anticipate that the UK’s current high level of inflation will continue across the balance of the year, with economic conditions becoming increasingly challenging for consumers and industry alike.
“Across the second half of the financial year we will continue to invest behind our brands and believe that our strategy will support continued growth. At the same time we will take appropriate mitigating action to limit the full year impact of cost inflation.”
Chief executive Roger White said: “Our brands are performing well and our business has continued to demonstrate both its resilience and flexibility. While not immune to the current cost inflationary pressures experienced across the UK, looking forward into the second half of the financial year, we remain confident of delivering a full-year profit performance ahead of the prior year and in line with board expectations.”
Analysts at the company’s house brokerage Shore Capital noted: “Strong leading UK brands, strong cash generation and a strong balance sheet leave AG Barr well placed for the future.”
The update comes after March’s annual results which saw the group report stronger sales and profits for the year ended January 30.
Profit before tax and exceptional items came in at £41.5m, which compared with £32.8m a year earlier, and was also ahead of the £37.4m banked in the 52 weeks to January 25, 2020.
Revenues in the year just past totalled £268.6m - a figure that compared with £227m and £255.7m in the previous 12-month periods.
The company proposed an interim dividend of 2p per share, and final and special dividends of 10p each.
White said at the time that the soft drinks giant was taking mitigating actions across all areas of the business, while trying to keep a cap on any price increases for its products. He said the firm was “doubling down on being as efficient as possible” in areas such as revenue management and procurement.
While consumers face a squeeze on spending amid the cost-of-living crisis, Barr is hopeful that its most famous product will remain an “affordable treat” for many.
The company is also behind the likes of the Rubicon and Funkin brands.