Home Business News AG Barr shares soar as investors toast sales

AG Barr shares soar as investors toast sales

by LLB Editor
28th Jan 20 12:03 pm

AG Barr’s share price jumped 13.4% to 613.5p after the Iru-Bru-maker said it expects annual adjusted pre-tax profits to be at the top end of expectations at £37m.

The figure is below the £44.5m gain the company reported in the previous year.

AJ Bell investment director Russ Mould said, “Scottish soft drinks firm AG Barr has got some fizz back on today’s bullish trading update, having gone flat in 2019 after a large and uncharacteristic warning on profit.

“The Irn-Bru maker had been a victim of a soggy summer, the sugar tax and shortages of carbon dioxide but also a strategy shift to focus on maintaining prices rather pushing volumes.

“In the long run this may prove to have been a smart move, as too much discounting can damage the integrity of a brand. And while the volume of drinks fell, average prices increased, helping drive today’s guidance for profit to be at the upper end of expectations.

“Encouragingly, the core Irn-Bru brand returned to growth in the fourth quarter amid strong Christmas trading, while recovery plans are being implemented at energy drink Rockstar and exotic drinks brand Rubicon.

“As the company acknowledges, the backdrop remains difficult but it at least benefits from a strong balance sheet, underpinned by robust cash generation, enduring brands, settled management and a best-in-class manufacturing base.

“Plans to introduce a deposit return scheme in Scotland, allowing consumers to return glass and plastic drink containers in return for a nominal sum, could be a complication and added cost for the business going forward.”

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