In its annual results statement yesterday, A.G. Barr warned that its operating margin faced a hit in the short term from brand investments, inflationary pressures and acquisitions, although the Irn-Bru maker is still forecasting profit growth to be in line with its expectations.
Over the year ended 29 January 2023, the Scottish firm saw its adjusted pre-tax profit climb 13.3% to £43.5m on revenues up 18.2% to £317.6m. The group stated that its main Barr Soft Drinks unit saw strong performance across its portfolio, driven by “continued focus on consumer engagement and investment in brand building”.
However, adjusted operating margin slipped from 14.9% to 13.6%. The business blamed supply chain cost inflation plus the short-term impact of lower margins from its recently acquired MOMA and Boost brands, alongside accelerated investment, including marketing spend for its Funkin and MOMA operations.
As with other FMCG firms, beverage makers have been grappling with the high cost of energy and raw materials, while cash-strapped consumers reduce their spending on non-essential items.
A.G. Barr’s Chief Executive Roger White warned yesterday that continued high inflation and the planned introduction of a Deposit Return Scheme (DRS) in Scotland this August had the potential to impact consumer purchasing behaviour in the drinks market this year.
However, he noted that A.G. Barr’s recent acquisitions and brand investment will “support the rebuilding of our operating margin over the medium term and the creation of a stronger and more sustainable business.”
Meanwhile, the company announced that Robin Barr will step down from its board after deciding not to seek re-election at its AGM in May.
The 85-year-old is the great-grandson of company founder Robert Barr and has been involved in the business for 62 years and served on the board for 58 years. He held the post of Chairman for 31 years before stepping down in 2009 and remaining as a Non-Executive Director. Barr is the company’s largest shareholder and is said to be one of only three people in the world who know the recipe for Irn-Bru.
His great-grandfather founded the business in 1875, producing and selling “aerated waters”, as fizzy soft drinks were then called.
The family links to the company are likely to continue, with Barr’s daughter Julie, who is A.G. Barr’s company secretary, standing for election as a Non-Executive Director at May’s AGM. She has been with the company for 19 years and is a qualified corporate lawyer.
Chairman Mark Allen commented: “We are hugely indebted to Robin for all his years of service, not to mention the balanced and insightful guidance he has provided to the Board as the business has developed across the last 60 years or so. I am delighted that Julie will join the Board in due course, and I am certain her experience and skills will complement and further strengthen our Board capabilities.”
