Irn-Bru maker AG Barr raises profit forecast despite Covid concerns

Irn-Bru creator AG Barr weathers supply chain and Covid concerns to boost earnings forecasts

  • Trade was the highest expectation since September
  • It now forecasts a pre-tax profit of £41m for the year to January 2022
  • But AG Barr remains in ‘a challenging supply chain environment’

Soft drink manufacturer AG Barr shares are up 6 percent this morning after the Irn-Bru maker revealed it expects earnings to come in above expectations this year after a strong trading spell.

The company said on Monday that trading momentum is “continuous and sales exceed expectations” in its soft drink and Funkin cocktail mixer business since it reported its interim results in September.

As a result, AG Barr now forecasts annual sales of around £264 million and pre-tax profits of £41 million for the 12 months to January 2022, up from £26 million last year.

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The company told investors it had seen “particularly strong” performance in its “on the go” and hospitality sectors, while “recent innovations have exceeded our expectations.”

It follows the company’s interim results in September, in which strong performance was overshadowed by warnings of ‘increased challenges in the UK road transport fleet, linked in part to the Covid-19 pandemic, impacting customer deliveries and inbound materials’. .

Despite this, it saw profits rise 43 percent in the six months to August to a record £24 million.

The company also restored its interim dividend to 2 pence per share, in addition to a special 10 pence payout to investors. Shares fell 3.3 percent, or 18p, to 521p.

While it raised its forecasts, AG Barr warned Monday that it remains in “a challenging supply chain environment” but that its “manufacturing and broader supply chain have maintained their resilience and supported the volume growth we are experiencing.”

It added: “The rapidly evolving situation related to the Covid-19 pandemic remains a risk, but we expect our revenue momentum to continue into 2022 and we plan to provide a further trade update in early February 2022.”

Shares of AG Barr are up 6 percent to 494.5 pence, bringing losses so far to 5.4 percent. The stock price remains 18.3 percent below pre-Covid levels.