AG Barr revenue rises but "supply chain issues" restrict growth

AG Barr PLC on Tuesday reported higher adjusted profit and said it was on track to meet market expectations, despite disruption to its supply chain costing around £10 million in revenue.

The Cumbernauld, Scotland-headquartered drinks company, whose brands include Irn-Bru and Rubicon, said pretax profit for the six months ended August 1 was £33.9 million, down 3.7% from £35.2 million the year before. This was due to "one-off costs associated with integrating Fentimans," which AG Barr acquired earlier this year. Adjusted pretax profit rose 2.6% to £36.1 million from £35.2 million.

Revenue climbed 8.5% to £247.4 million from £228.1 million, which AG Barr attributed to "core brand growth and the contribution from recent acquisitions".

However, the company acknowledged that reduced stock availability in the second quarter disrupted customer deliveries and shelf availability, resulting in an estimated £10 million in lost first-half revenue. It said this was "primarily from internal supply chain issues linked to our capability and capacity change programme, but also from external issues associated with third party manufacturing."

AG Barr said the issues have now been resolved, "with stock availability and customer service normalising through H2."

"With the majority of our Cumbernauld operational change programme having been completed, and with our Milton Keynes manufacturing upgrade firmly on track, we are confident that we have a strong, stable and more efficient supply chain for H2 and beyond," it added.

AG Barr also declared a 3.82 pence per share interim dividend, up 11% from 3.44p the previous year.

"Our brands continue to take market share and are carrying strong momentum with both customers and consumers into H2," AG Barr said. "The work completed in H1 provides the platform for H2 and beyond, and we are confident of delivering a full year performance in line with market expectations."

The firm cited an analyst consensus forecasting £71.5 million in adjusted pretax profit, which would be up from £65.8 million for the year ended January 31.

It also expects revenue growth of around 10%, an adjusted operating margin of around 15%, and an adjusted return on capital employed of approximately 19%.

AG Barr shares were down 3.2% at 580.00 pence on Tuesday morning in London.

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