IRN-BRU maker AG Barr has said it expects sales to be up nearly a fifth for the first half of its financial year.
The 18 per cent rise in sales to around £134 million comes alongside a recovery in “on the go” consumption and strong “at home” sales, as well as “positive momentum” in Funkin cocktail mix division as people to return to hospitality venues.
The Cumbernauld-based drinks giant said it intends to increase brand investment going into the next six months but it flagged recent UK haulage concerns over deliveries in and out, and wider labour pool challenges.
On a like-for-like 26-week basis revenue is expected to be up about 13%, with trading strong across both business units, Barr Soft Drinks and Funkin.
It said the results have been driven by a combination of brand-led initiatives and market factors, some of which were long-term and structural and others more one-off, resulting in a short-term boost to its operating margin.
However, Barr said it would not expect the tailwinds to be replicated in the second half of its financial year although the 12-month operating margin is still anticipated to be “slightly ahead “of the prior full year.
Barr also said that it has been growing volumes and improving its product mix.
It said recent new product launches are performing well, with “positive consumer feedback and encouraging customer listings”.
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Roger White, AG Barr chief executive, said: “While uncertainty remains, we are confident in delivering our plans across the balance of the year."
The full-year performance reflect the “well-documented pressure on supply chains and rising commodity prices”.
The energy drink sub category is outperforming the total soft drinks market and Barr's focus on Rubicon RAW Energy, has had “a very positive start” and is expected to be accelerated in the second half of the year.
“During the various lockdown periods, Funkin capitalised on the increase in demand for cocktails at home, through both traditional retail and direct to consumer channels, becoming the UK’s No.1 ready to drink cocktail brand,” Barr said.
“Our operational resilience has been excellent across the first half of the year.
“In recent weeks, however, we have seen increased challenges associated in part with the Covid-19 pandemic, across the UK road haulage fleet, impacting customer deliveries and inbound materials.
"In addition, the risks associated with the wider labour pool and the current Covid-19 pandemic response, are areas we continue to monitor closely.
“We believe the commitment and capability of our workforce and supply base will stand us in good stead in these uncertain times.”
The firm underlined its July guidance that profit for the current 53-week financial year ending January 30, 2022 is expected to be slightly ahead of the performance delivered in the 52-week year prior to Covid which saw profit before tax of £37.4m.
Mr White said: “We are pleased with the performance of the business in the year so far."
AG Barr shares closed down 1p at 565p.
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