27th Sep 2022 18:29
(Alliance News) - Scottish soft drinks maker AG Barr showed off some positive results on Tuesday, with analysts cheering the firm's growth across all its businesses.
The drinks maker is based in Cumbernauld, Scotland, and produces and markets a number of well-known UK brands, including Irn-Bru, Rubicon, and Funkin.
Shares in AG Barr closed down 1.1% at 492.00 pence each in London on Tuesday, and have lost 5.2% over 2022.
Charlie Williams, an equity research assistant at Hargreaves Lansdown, said the firm is "finally seeing" momentum after a difficult period during lockdowns.
"The group has continued investment into renowned brands like Irn Bru are starting to reap rewards, backed up by successful launches of new product lines," he continued.
In the six months ended July 31, the company reported a pretax profit of GBP24.7 million, up 1.2% from GBP24.4 million a year prior. It attributed last year's first half profit performance to a number of one-off factors, including compensation for the removal of a Cumbernauld wind turbine, and sales of distribution depots.
HL's Williams added: "AG Barr isn't immune to the inflationary pressures, though. Cost management remains a key focus, but recent price hikes have already seen volumes fall and management remains conscious of consumer spending patterns as incomes get squeezed."
John Moore, senior investment manager at RBC Brewin Dolphin, said the results showed the firm's "resilience" despite a "highly challenging set of circumstances".
Moore continued: "The cost of living crisis and rising energy costs are significant uncertainties for the company, but there is a confidence in today's statement that suggests the management team are ready to weather the storm.
Revenue increased by 17% to GBP157.9 million from GBP135.3 million.
The company said growth was driven by "ongoing brand investment and the successful execution of our pricing and promotional activity". It also said trading benefited from warm summer weather and continued Covid-19 recovery.
It lifted its interim dividend payout by 25% to 2.50 pence per share from 2.00 pence.
Moore added: "The 25% increase to the dividend is also good news for shareholders and is well covered by a strong balance sheet, with cash built up over the past two years.
"AG Barr has a core set of brands performing well, the question is what the company will do next with its investments in STRYKK and Moma, and what other investment opportunities may come up in the changing and uncertain business environment. The company is well placed facing into what is generally a difficult backdrop."
AG Barr expects that high inflation levels will continue to create challenging economic conditions for consumers and industry alike, but intends to take "appropriate mitigating action" to limit its full-year impact.
It said its experience through Covid-19 made it confident the company could remain "profitable and cash-generative through prolonged disruption".
By Paul McGowan; [email protected]
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