- Profit guidance upgraded again
- Brands have positive momentum
- Euan Sutherland to succeed Roger White
One of Shares running Great Ideas selections, Irn-Bru-to-Rubicon drinks maker AG Barr (BAG) served up another full-year profit upgrade which sent the shares up 1.5% to a 52-week high of 576p.
The beverages business behind iconic Scottish tipple Irn-Bru as well as take home cocktail offering FUNKIN and challenger oat milk brand MOMA also announced that former SAGA (SAGA) and Superdry (SDRY) boss Euan Sutherland will succeed the well-regarded Roger White as chief executive with effect from 1 May 2024.
POUR ME ANOTHER UPGRADE
AG Barr now expects adjusted pre-tax profit for the year ended 28 January 2024 to be roughly £49.5 million, slightly ahead of previous market expectations and representing tasty 13.8% year-on-year growth.
Despite the wet summer weather, which dampened third-quarter demand, AG Barr’s annual sales are anticipated to be 26% higher year-on-year at about £400 million.
This reflects a first ful- year contribution from Boost, the energy, sport, iced coffee and protein drinks company acquired in late 2022, although organic growth was also robust at 7.6%.
POSITIVE BRAND MOMENTUM
Transformed under White’s leadership from a regional soft drinks maker into a branded multi-beverage business, AG Barr delivered broad-based growth across its soft drinks division last year with Irn-Bru, Rubicon, Boost and Barr Flavours all delivering volume growth in a tough UK market.
FUNKIN Cocktails delivered a ‘strong’ fourth quarter driven by an ‘excellent’ performance in the ready to drink segment, which more than compensated for a ‘variable’ on-trade with late-night venues under pressure.
Meanwhile, MOMA Foods served up double-digit sales growth supported by new business wins, ‘most notably within the speciality coffee channel’ according to AG Barr.
The FTSE 250 firm’s focus on rebuilding margins is also starting to bear fruit with cost inflation back to normal levels and its supply chain investment programme on track.
CHANGING OF THE GUARD
Sutherland, who previously steered SAGA, Superdry and The Co-op, will take over as chief executive on 1 May 2024, with White remaining available until the end of July to support a smooth handover.
The new broom has a good grounding in global fast-moving consumer goods brands, having previously worked at Mars and Coca-Cola and spent eight years on the board of Britvic (BVIC) as a non-executive director.
Sutherland said he was ‘very excited’ to join AG Barr, which has ‘a unique heritage, strong culture and exceptional brands. I look forward to working with the board and the wider business to continue to deliver significant value to shareholders, stakeholders and employees for the long term.’
BALANCED CONCOCTION
Begbies Traynor’s (BEG:AIM) Julie Palmer noted that ‘despite the upcoming increase to the national living wage and business rates threatening to shake up AG Barr’s balanced concoction of competitive prices and robust margins, the soft drinks stalwart appears well-positioned to weather these storms thanks to its diversified portfolio of brands and highly automated production line.’
Palmer added: ‘After more than two decades at the helm, White steps down later this year and the newcomer has some big shoes to fill at a time when businesses are battling a tricky economic backdrop.
‘Changes of the guard at the top always create some pause for thought but for the maker of Scotland’s ‘other’ national drink, there’s clearly momentum build across its stable of iconic brands which should position it well to continue to shake up an ever-evolving soft drinks market.’
