Shares in AG Barr fizzed higher today as the Irn-Bru maker lifted its profit expectations for the year.
The group continued to benefit from the return of trading with the hospitality industry and consumers drinking out of the home again.
AG Barr’s share price soared 7.3% to 502p by lunchtime today following the unscheduled trading update published this morning.
Fellow soft drinks groups Britvic and Vimto maker Nichols also benefitted from a positive read across for the sector to rise 0.9% to 900p and 4% to 1,347p respectively.
Boosted by improved demand from the out-of-home and hospitality channels, with sales growth ahead of expectations across both the Barr Soft Drinks and Funkin divisions, AG Barr now expects revenues for the full year to hit around £264m and pre-tax profits to reach £41m.
This compares with £256m and £37.4m achieved in the year to January 2020, before the pandemic slammed businesses with exposure to the on-the-go market.
“In what remains a challenging supply chain environment, our production and wider supply chain have maintained their resilience and supported the growth in volume we are experiencing,” AG Barr said.
“The fast-moving situation in relation to the Covid-19 pandemic remains a risk. However, we expect our revenue momentum to continue into 2022 and we plan to provide a further trading update in early February 2022.”
Despite the increase in value today, the stock remains 3.7% down in the year to date. The shares fell from highs of 581p in August when CEO Roger White warned that cost pressures were squeezing margins as inflation started to come into the market.
Shares are also still almost 20% below where they were trading pre-pandemic.
AJ Bell investment director Russ Mould said: “Investors will be reassured to some degree by Roger White’s comments that the company has overcome supply chain issues to meet volume demand, although they will note the warning about ‘ongoing cost pressures’, given challenges such as the availability of both carbon dioxide and haulage capacity, as well as wider input cost pressure.”
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