16th Jul 2019 09:15
(Alliance News) - Shares in soft drinks maker AG Barr PLC plummeted Tuesday after weak trading during the first half of the year saw revenue sink 10%, with forecasts that full-year profit could be as much as a fifth lower.
Shares in AG Barr were 27% lower at 630.83 pence in London on Tuesday. The stock hit a new 52-week low of 601.00p in early trade.
For the 26 weeks ending July 27, revenue is forecast by the company to fall 10% to GBP123 million from GBP136.9 million reported the year prior.
AG Barr reported trading during the period had been "below our expectations" amid a number of market and brand-specific headwinds.
In particular, AG Barr said 2018 had been a year of "unprecedented" challenges for the industry through a combination of a new soft drink levy, carbon dioxide shortages, and a hot summer. At the time, AG Barr had focused on building volume over the short-term before returning emphasis on increasing prices in March 2019.
AG Barr had expected this change to hurt volumes. Nonetheless, a combination of "disappointing" spring and early summer weather and brand-related issues at Rockstar energy and Rubicon juice drinks sapped trading performance.
The FTSE 250-listed firm added that the impact of the weather on results was being compounded as the company approaches the half-year stage, when the hot weather was at its peak in 2018.
Despite this, within its core carbonates business - including its iconic IRN-BRU brand - AG Barr is experiencing "positive indications" that customers are accepting the new higher price positioning. Similarly, its innovation pipeline remains strong.
Cocktail mixers brand Funkin continued to "perform strongly" with recently launched products "already exceeding expectations", AG Barr said.
For the full year ending late January 2020, AG Barr warned it does not expect to be able to recover all the volume and revenue weakness experienced at the start of the year. Consequently, profit performance is forecast to decline by up to 20% on the year before.
For the year ended January 2019, AG Barr reported pretax profit of GBP45.2 million on revenue of GBP279.0 million.
"While the Funkin business goes from strength to strength, it has been a challenging start to the year for Barr Soft Drinks," AG Barr Chief Executive Officer Roger White said.
"Weather comparatives and trading, particularly in the impulse on-the-go market, have been even tougher than expected which, along with some brand specific challenges, have led to a short-term impact on our financial performance," White added. "We are focused on returning to growth and will continue to take the actions we believe necessary to succeed in the dynamic environment within which we operate."
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