A.G. Barr, the owner of the Irn-Bru and Rubicon brands, has reported a surge in half-year sales and record profits after bouncing back from last year’s slump when lockdowns severely impacted out-of-home drink sales. However, the Scottish firm warned that second-half margins will slide on rising costs, with it facing difficulties in making deliveries due to the HGV driver shortage.
Over the 27 weeks to 1 August, A.G. Barr’s pre-tax profit jumped 42.8% to £23.7m on revenue up 19.5% to £135.3m.
The group stated that its Soft Drinks unit had benefited from the recovery in ‘on-the-go’ consumption, growing volume and improving product mix, while ‘at home’ sales remained strong as they have done throughout the pandemic. Recent new product launches were also said to be performing well, with encouraging customer listings.
The Irn-Bru brand grew revenue by 18.9%, supported by marketing activity and the recovery of on-the-go consumption.
Rubicon brand sales (excluding Rubicon RAW Energy) increased by 26.2% with still, sparkling and spring variants all seeing growth.
Meanwhile, its Funkin cocktails division was helped by the reopening of hospitality venues with on-trade sales surging up 229.5%. ‘At home’ cocktail sales also grew by 114.3% to £10.2m, representing 54.5% of Funkin’s total sales in the half.
Chief Executive Roger White said A.G. Barr had delivered resilient growth during the period and remained on track for “strong full-year profit performance, slightly ahead of our 2019/20 pre-Covid level.”
However, whilst full-year operating margin is expected to be slightly ahead of the prior year, the group said it does not expect to maintain its current level of margin in the second half, reflecting the rephasing of its increased marketing investment and increased cost inflation across the balance of the year.
A.G. Barr also joined other firms in the sector in highlighting that it was struggling to make deliveries due to the HGV driver shortage and wider supply chain issues.
In its results statement, the group said: “In recent weeks we have seen increased challenges across the UK road haulage fleet, associated in part with the Covid-19 pandemic, impacting customer deliveries and inbound materials.
“In addition, the risks associated with the wider labour pool and the current Covid-19 pandemic response are areas we continue to monitor closely.”
White said many of the supply issues were “structural” and out of the company’s direct control but stressed that the firm was “so far managing its way through” the crisis.
He said the upcoming Christmas period would be far from normal but said the business was as “well placed as it can be”.
