Irn Bru maker Barr boosts divi as profit tops £42m

A.G. Barr, the Cumbernauld-based maker of Irn-Bru, Rubicon energy drinks and Funkin cocktail mixers, said on Tuesday its statutory profit before tax rose 62.3% to £42.2 million in the 53 weeks ended January 30, 2022.

Barr is recommending a final dividend of 10p per share to give a proposed total dividend for the full year of 12p per share, plus a 10p special dividend paid in October 2021.

Revenue rose 18.3% to £268.6 million.

The company said its balance sheet strengthened further on the back of the strong trading, with £68.4 million net cash at bank as of January 30 — a £18.4 million increase on the prior year after the payment of total shareholder dividends of £13.4 million and its investment in MOMA.

In December, Barr announced it acquired an initial 60% equity stake in MOMA Foods Limited, the independent branded porridge and plant-based milk business.

Barr expects to acquire a remaining 38.2% of MOMA over the next three years.

Barr CEO Roger White said: “Our business and brands have once again proven their resilience in uncertain and often challenging circumstances.

“We have accelerated our revenue growth and consequently delivered a strong financial performance.

“In the year we have recommenced our dividend, alongside paying a one-off special dividend, and our balance sheet has continued to strengthen.

“Our focus on environmental sustainability has accelerated, as we increase our use of recycled materials, reduce our carbon footprint and ready our business for a successful deposit return scheme implementation, due to go live in Scotland in August 2023.

“We enter the new financial year with good momentum and exciting brand and sales plans.

“Trading in the early weeks of the new financial year has been well ahead of the prior year and in line with our expectations.

“Like most companies we are facing significant inflationary pressures but we are well placed as a group to deal with these and will continue to seek to manage our exposure proactively through mitigating actions across revenue management, pricing, procurement and cost control.

“The growth potential of our business is underpinned by our growing brands, our highly capable people and our resilient infrastructure.

“We plan to invest further in all of these important areas and I remain confident in our ability to deliver continued growth in both revenue and profit in the coming year.”

AJ Bell investment director Russ Mould said: “Having suffered considerable disruption during the pandemic as restaurants, bars and nightclubs were closed, drinks manufacturer AG Barr has now come out the other side smiling.

“Full-year sales and profit are now ahead of pre-Covid days, and it is doling out more generous dividends once again.

“While the company is sitting pretty, sustaining this positive momentum won’t be easy.

“There are considerable uncertainties about the strength of consumer spending once we move into April and energy prices shoot up.

“Inflationary pressures in general are intensifying and consumers will have to make some serious decisions about where they spend money, and where they cut back.

“AG Barr will no doubt be banking on the consumer continuing to find some cash for small treats like its range of fizzy drinks including Irn Bru, as well as people refusing to give up small luxuries such as a night out with friends which is relevant to its Funkin cocktail brand.

“While it couldn’t have foreseen the Ukraine war pushing up the cost of living further, AG Barr last year taking steps to diversify its income might prove to have been a wise move.

“An investment in plant-based foods group MOMA gives it a position in the foods sector and a new avenue through which to explore earnings growth opportunities.

“Decent weather this spring and summer would be a major boost to the company, so too the Queen’s Jubilee bank holiday break which could turn out to be a four-day bumper sales period for all companies in the hospitality sector.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.