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A-Brands

A.G. Barr 'Confident' Of Being Able To Manage Inflationary Pressures

By Steve Wynne-Jones
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A.G. Barr 'Confident' Of Being Able To Manage Inflationary Pressures

Soft drinks maker A.G. Barr has said that it plans to mitigate 'significant inflationary pressures' over the coming year through a combination of revenue management, pricing, procurement and cost control.

The maker of Irn-Bru and Funkin said that it has entered its new financial year with 'good momentum', reporting trading 'well ahead' of the prior year in the first few weeks.

"The growth potential of our business is underpinned by our growing brands, our highly capable people and our resilient infrastructure," said Roger White, chief executive.

"We plan to invest further in all of these important areas and I remain confident in our ability to deliver continued growth in both revenue and profit in the coming year."

Double-Digit Growth

A.G. Barr was commenting as it reported a 18.3% increase in revenue in the full year to 30 January, to £268.6 million. Profit was up 62.3% to £42.2 million.

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Its Barr Soft Drinks arm reported 'strong momentum', the company said, supported by brand investment and innovation, particularly in energy. Elsewhere, its Funkin brand made 'significant progress' in both the take home and hospitality sectors.

"Our business and brands have once again proven their resilience in uncertain and often challenging circumstances," said White.

"We have accelerated our revenue growth and consequently delivered a strong financial performance. In the year we have recommenced our dividend, alongside paying a one-off special dividend, and our balance sheet has continued to strengthen."

Analyst Comments

Commenting on its performance, Wayne Brown of Liberum, described the group's performance as a "top quality defensive play underlying double digit growth".

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He noted that A.G. Barr "remains confident of managing material cost inflation particularly across packaging (glass and aluminium) and energy via cost reductions, production efficiencies, revenue management via pack and promo mix, and a mid-single digit price increase, which has been passed through already."

Elsewhere, Russ Mould of AJ Bell said, “While the company is sitting pretty, sustaining this positive momentum won’t be easy. There are considerable uncertainties about the strength of consumer spending once we move into April and energy prices shoot up. Inflationary pressures in general are intensifying and consumers will have to make some serious decisions about where they spend money, and where they cut back.

“AG Barr will no doubt be banking on the consumer continuing to find some cash for small treats like its range of fizzy drinks including Irn Bru, as well as people refusing to give up small luxuries such as a night out with friends which is relevant to its Funkin cocktail brand.

“While it couldn’t have foreseen the Ukraine war pushing up the cost of living further, AG Barr last year taking steps to diversify its income might prove to have been a wise move. An investment in plant-based foods group Moma gives it a position in the foods sector and a new avenue through which to explore earnings growth opportunities."

© 2022 European Supermarket Magazine – your source for the latest A-brands news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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