29th Mar 2022 17:00
(Alliance News) - AG Barr PLC will be banking on continued demand for its products as the soft drinks maker looks to sustain momentum against a backdrop of rising inflation.
AG Barr on Tuesday reported that its profit for financial 2022 surpassed pre-pandemic levels on strong trading, leading the company to resume its final dividend to shareholders.
The Cumbernauld, Scotland-based firm posted a pretax profit of GBP42.2 million for the year 53 weeks to January 30. This reflects a 62% increase from GBP26.0 million in the 52 weeks to January 24, 2021 and a 13% increase from GBP37.4 million in pre-pandemic financial 2020.
This was on revenue growth of 18% to GBP268.6 million from GBP227.0 million.
Further, the soft drink manufacturer credited its "excellent" financial performance to strong trading performance and cost controls. It noted that all of its brands are in growth, with its core brands ahead of pre-pandemic levels now.
The IRN-BRU, Tizer, Funkin Cocktails and Rubicon maker said its strong cash generation and robust balance sheet continue to support capital and dividend programmes.
The company proposed a 10 pence final payout, taking its ordinary dividend for the year to 12p. It had also paid a 10p one-off special dividend in October. The soft drinks maker had paid out nothing in financial 2021 and 4.00p in financial 2020.
AG Barr stated that trading in the early weeks of the new financial year has been "well ahead" of the same period a year before and in line with its expectations.
Despite the strong performance, AJ Bell's Russ Mould said sustaining this positive momentum will not 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," Mould said.
AG Barr also said it was optimistic about the recovery of the UK hospitality industry despite the cost-of-living crisis as the return of younger consumers to pubs and bars helped drive strong demand for cocktails.
"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... 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," Mould added.
By Arvind Bhunjun; [email protected]
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