AG Barr forecasts annual profits and sales to beat expectations
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AG Barr raises full-year performance forecasts as Irn-Bru maker benefits from price hikes and acquisitions
- AG Barr expects sales for the year ended January 29 to grow by approximately 17% to £315m
- The company predicts that the annual figures will be ‘slightly higher’ than expected
- Irn-Bru, Rubicon and Tizer are among the brands owned by the soft drink company
AG Barr expects full year revenue and profit to exceed market forecasts, supported by price increases and strong performance of its newly acquired brands.
The soft drink maker behind Irn-Bru and Tizer expects sales growth of around 17 per cent to £315 million for the year ended January 29, compared to analyst forecasts of £302 million.
It also forecasts annual revenue to be ‘slightly higher’ than expected and higher than the previous 12 months when it made a pre-tax profit of £42.2m.
Performance: Irn-Bru and Tizer maker AG Barr said it expects to report sales growth of around 17 per cent to £315m for the year ended January 29
Sales were boosted by price increases last February in response to rising costs of raw materials, such as packaging, glass and the carbon dioxide needed to make the drinks fizz.
Sales were further boosted by the recent acquisition of two brands: Leeds-based energy drink maker Boost and oat milk producer MOMA Foods.
The Scottish company bought the former company in early December in a £20m upfront deal, with an offer of up to £12m more, subject to revenue and profits over the next two years.
A few weeks later it completed the full acquisition of MOMA, whose products include porridge, muesli and bircher muesli, after initially buying a 60 percent stake in the group last year.
MOMA supplies many of the UK’s largest supermarkets, such as Morrisons, Tesco and Sainsbury’s, as well as budget airline EasyJet and JD Wetherspoon.
AG Barr was motivated to invest in the company in part by the rising popularity of plant-based milks and veganism, especially among Gen Z and millennials.
CEO Roger White said, “We accelerated the company’s development by further building our portfolio of differentiated brands with the acquisition of Boost and full ownership of MOMA.”
Trade also benefited during the year from warm summer weather and a continued recovery in consumption in on-trade outlets, which have been largely closed or heavily restricted for the past two years.
Lockdowns particularly affected demand for the company’s Strathmore water bottles and Rubicon drinks, the latter impacted by the absence of certain promotional activities during Ramadan.
Sales recovered significantly as pubs, bars and restaurants opened gradually, take-away purchases remained resilient and customers gobbled up the group’s main carbonated soft drinks and Funkin cocktail mixers.
AG Barr expects sales to grow further this year, despite inflationary pressures and the introduction of a deposit guarantee scheme in Scotland in August.
Under this scheme, people who purchase a single-use beverage container pay a 20 pence deposit which they can only claim back when they are taken to a ‘return point’, such as a shopping center or supermarket.
AG Barr Shares rose 4.55 percent to 551 pence late Tuesday morning, placing them among the top five risers on the FTSE All-Share Index.