Soft drinks maker AG Barr (BAG) shrugged off the impact of Omicron on the hospitality sector in the last 10 weeks of its financial year to serve up its third upgrade in six months, news that nudged the shares up 3.2% to 511p.

The company behind iconic Scottish fizzy drink Irn-Bru as well as the Rubicon and Funkin brands now sees revenue for the year to January 2022 coming in at around £267 million.

‘Marginally ahead’ of the upgraded guidance given in November 2021, that represents 17.5% year-on-year growth and impressively, means AG Barr’s sales are now above pre-pandemic levels.


Pre-tax profit before exceptional items is also expected to be marginally ahead of earlier guidance, implying £41.2 million based on an improved operating margin of around 15.6%.

AG Barr explained its strong trading performance was achieved despite the ‘unexpected and increased UK Government restrictions related to the Omicron Covid variant’ and further emphasised ‘the quality and resilience of our brands, business model and people’.

Both the Barr Soft Drinks and Funkin business units traded well, ‘particularly during the periods when restrictions were eased’, added the company.

So far, AG Barr has coped well with rising energy and packaging costs through a combination of cost control actions and price increases, although house broker Shore Capital said potential headwinds remain.

‘Looking into full year 2023,’ cautioned Shore Capital, ‘we highlight CO2, fruit and recycled plastics as areas for management to keep an eye on (normally difficult to hedge), alongside the general wage inflation that remains prevalent in the system.’


Shore Capital reiterated its view that AG Barr is ‘a very high-quality business with an excellent management team and a well-invested manufacturing infrastructure that supplies a differentiated portfolio of British brands with notably strong regional positions.’

The broker argued ‘such traits support attractive margins and sustained cash generation and most clearly demonstrated in our forecast for a material year-end net cash position despite a special dividend a special dividend totalling £11.2 million and an initial 60% strategic investment in MOMA FOODS.’

Liberum Capital, which views AG Barr as a ‘top defensive pick’, said revenue came in ‘£3 million ahead of expectations representing the third upgrade in six months.

‘This comes despite the challenges from Omicron where opportunity was lost on the upside rather than create downside risk.’

It believes AG Barr is ‘well placed for the year ahead; as a vertically integrated, 100% branded business, with more than 40% of the sales coming from the impulse channel, gives the group total commercial oversight and pricing power flexibility’.


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Issue Date: 01 Feb 2022