Soft drinks-to-ready-made cocktail maker AG Barr (BAG) made a strong start to its new financial after lockdown restrictions eased and the reopening of hospitality and leisure venues boosted drink sales.
The owner of brands such as IRN-BRU and ready to drink cocktail Funkin saw its share price stay broadly flat at 529p on Friday.
TRADING PICKS UP
In a brief update ahead of its annual general meeting, the high-quality soft drinks group said that trading in the first four months of the year to January 2022 is in line with expectations.
Since Covid restrictions have eased, all parts of AG Barr’s business have seen a pick in trade and AG Barr also flagged a positive impact on both sales volume and mix thank to a shift back towards ‘drink now’ purchases in hospitality and leisure venues.
Lockdown restrictions were in place for the bulk of the first quarter, yet AG Barr’s soft drinks trading has proved ‘relatively strong’ since the start of the new financial year, supported by encouraging new product launches such as Rubicon RAW Energy, which is achieving ‘promising initial customer listings and consumer feedback’.
FUNKIN’S STILL GOT MOMO
Another positive takeaway is that Funkin is seeing a return to strong momentum in the on-trade and the positive momentum seen through the off-trade in 2020 from Funkin ready to drink cocktails is continuing.
‘Whilst there remains some uncertainty in the short term as pandemic related restrictions ease, we believe we are well placed to drive the growth of the business and remain confident in the company’s prospects for the full year,’ insisted robustly financed AG Barr.
A firm favourite of Shares as well as respected fund manager Nick Train, the drinks group also reconfirmed its commitment to recommence dividend payments during the current financial year.
Shore Capital is another fan of AG Barr, which it labels a ‘consummate brand owner and manufacturer, with excellent management, top-class assets and a portfolio of very valuable proprietary brands’.
Following the update, the broker reiterated its forecast for 2022 pre-tax profits of £33.8 million, which would represent improvement on last year’s pandemic-impacted £32.8 million taxable profits haul.
