AG Barr sees profits slump as hospitality woes overshadow fizzing retail sales
Irn-Bru maker AG Barr has seen annual profits slump by nearly a third after lengthy coronavirus restrictions knocked sales in pubs and across the hospitality sector.
The soft drinks group, based in Cumbernauld, Scotland, reported pre-tax profits plunging 30.5% to £26 million for the year to January 24 as sales fell 11.2% to £227 million.
Sales across the bars and pubs sector plummeted due to repeated lockdowns in the pandemic and AG Barr was unable to offset this despite surging trade at supermarkets and convenience stores
The group, which also makes Rubicon, said restrictions since December, alongside the end of its contract to sell and distribute Rockstar energy drinks in October, left second-half sales tumbling 14.6%.
AG Barr kept dividends on hold, having paused them last April, but said it remained “committed” to restarting payouts to shareholders in the current 2021-22 financial year.
Chief executive Roger White told the PA news agency that AG Barr is “optimistic for a company posting lower profits”.
He said: “This year has started against the backdrop of lockdown but we see the route out of it.
“With hospitality and impulse sales, we hope we will see growth as restrictions ease but we aren’t expecting things to go back to normal immediately. We’ll have months of steady growth.”
The chief added that it will be able to drive more funds into its growth plans and will invest further in innovation in 2021.
Mr White said: “Whilst there now appears to be a route out of lockdown, the immediate future remains uncertain.
“Notwithstanding this current backdrop, our strategy for the year ahead is to support our core growth initiatives with significant investment.”
AG Barr said it is benefiting from the trend for locked-down Britons to drink cocktails at home, which is boosting demand for its Funkin ready-to-drink cocktails.
It is also investing in the growing energy drink market, recently launching Rubicon RAW Energy and driving sales for its Irn-Bru Energy brand.
Irn-Bru sales dropped 6.5% over the year, which it said was a “robust” performance in the pandemic, helped by rising demand for Irn-Bru Energy and Irn-Bru Xtra.