Irn-Bru Maker A.G. Barr Reports 'Record' First-Half Profit
Soft drinks firm A.G. Barr has reported record first-half profits, driven by positive underlying volume momentum, while the business is confident that full-year profits will be 'slightly ahead' of the previous full year.
Profit before tax at the business stood at £23.7 million (€27.8 million) for the 27 weeks to 1 August, the group said, a 42.8% increase on the previous half-year.
Revenue was up 19.5% to £135.3 million (€158.5 million) in the period, while the group saw a 260-basis-point gain in operating margin, to 17.7%, in line with its previous forecast.
"AG Barr is a growth-focused business operating in resilient and growing market categories, with dynamic brands, great people and a strong financial position," commented Roger White, chief executive.
"Our positive first half performance reflects these fundamentals as well as the encouraging performance of recent innovation launches in both soft drinks and cocktails."
The group, which recently announced a number of board changes, reported 'positive momentum' across its core brands Irn-Bru and Rubicon during the period, with its Barr Soft Drinks arm benefiting from the recovery in 'on the go' consumption, as well as a consumer campaign undertaken during the Euro 2020 football tournament.
It added that the energy sub category 'continues to outperform' the total soft drinks market, as it reported an 'encouraging performance' from new product launches such as Rubicon RAW Energy.
Funkin' Bounces Back
The group's Funkin' arm, which was impacted by the closure of the hospitality sector, has also bounced back, seeing a 229.5% increase in sales in the off-trade during the period.
The business' at-home cocktail offering also continues to gain new customers, reporting a 114.3% increase in sales in the first half, to £10.2 million.
Looking ahead to the remainder of the year, A.G. Barr noted that there the first half saw some benefits that 'will not repeat in the second half', while it also anticipates cost inflation and increased supply pressure.
"We remain on track to deliver strong full year profit performance, slightly ahead of our 2019/20 pre-COVID level," White added.
Commenting on its performance, analyst Russ Mould of AJ Bell commented, “Even a recovery in sales and profits, a net cash balance sheet and the return of dividend payments are failing to raise a cheer for soft-drink maker AG Barr’s first-half results.
"Perhaps investors are more concerned about the prospect of shortages of carbon dioxide and haulage capacity as well as wider input cost pressure, given the clear hint from chief executive Roger White that profit margins may be lower in the second half than the first.
“But if the first-half’s record stated pre-tax profit of £24.4 million benefited to the tune of around £5 million, thanks to restocking by bars and restaurants and the phasing of marketing investment, it might not pay to overdo the gloom. Management still expects operating margins to exceed last year’s 14.8%, on an adjusted basis for the full-year, even if that implies a sharp drop in the second half from the 17.7% reached in the first six months."