AG Barr is on track to achieve full-year market expectations
AG Barr, the maker of IRN-BRU, remains confident about hitting its full-year market expectations, with analysts predicting an adjusted pre-tax profit of £71.5 million for the fiscal year ending in January 2027. The company is projecting about a 10% revenue growth, maintaining an adjusted operating margin of approximately 15% and a return on capital employed of around 19%.
The initial months of the second half of the year have shown a continuation of positive trends, supported by robust demand and cost-efficiencies stemming from recent acquisitions. During the summer, AG Barr faced supply chain challenges primarily due to changes in its factories and some third-party manufacturers. These issues, estimated to have caused £10 million in lost revenue, have been resolved, restoring stock availability to normal levels.
In the 26 weeks leading up to August 1, revenue rose by 8.5% to £247.4 million, partly due to the acquisitions of Fentimans and Frobishers. Meanwhile, adjusted pre-tax profit saw a marginal increase of 2.6% to £36.1 million, with the adjusted operating margin remaining at 15.0%. Statutory pre-tax profit, however, declined by 3.7% to £33.9 million, due to one-off integration costs related to Fentimans.
AG Barr has been able to hedge against some rising commodity prices attributed to the Middle East conflict, though higher fuel costs have not been fully passed onto customers so far. Nevertheless, the company is secured on hedgable commodities for the current year and into the next.
AG Barr's sales outpaced the broader UK soft drinks market, growing by 7.2% compared to the market's 6.7% increase, as reported by Circana data. Marketing efforts, such as IRN-BRU's campaign during Scotland's World Cup participation, led to record engagement across multiple channels. However, certain segments such as FUNKIN cocktail mixers and Barr Brands underperformed, with a supplier fault leading to the recall of MOMA porridge.
As a result of its investments, including the £40.5 million Fentimans acquisition, net bank debt was recorded at £47.0 million, compared to net cash of £41.3 million the previous year. The interim dividend declared reflects an 11% increase, standing at 3.82p per share.
