- Strong first half with revenue up 33%
- Previously upgraded full year profit guidance reiterated
- Medium-term plans to rebuild operating margin progressing well
Irn-Bru and Rubicon drinks maker AG Bar (BAG) revealed strong first half growth and reiterated confidence in delivering full year profit in line with raised guidance despite poor summer weather.
The shares responded positively, fizzing up 2% to 494.5p in early trading leaving them roughly unchanged over the last year.
Revenue for the 26 weeks to 30 July increased 33% to £210.4 million boosted by the acquisition of Boost Drinks in December 2022. On an organic basis revenue was up by a tenth.
Adjusted pre-tax profit increased by 6.7% to £27 million reflecting a lower adjusted operating margin of 12.5% (16.2% last year) due to a lower margin at the Boost division and a decision not to fully pass on cost inflation.
HOW DID THE BUSINESS PERFORM?
Long serving CEO Roger White who announced plans to retire over coming months commented: ‘We remain confident in delivering a full year profit performance in line with our recently increased market expectations and are well positioned to deliver strong shareholder returns for the long term.’
The soft drinks business saw strong trading driven by volume, price, and mix, with the Boost brand growing revenue by 37% to £36.1 million driven by ‘excellent’ volume progress and ‘distribution gains’.
Shore Capital described the division’s growth as ‘stellar’ and upped full year sales estimates from £55 million to £60 million.
Take home cocktail brand FUNKIN saw modest overall revenue growth of 2.6% but the off-trade segment grew 11% with FUNKIN maintaining its position as the UK’s number one cocktail brand.
The MOMA foods division saw significant growth of 24% compared with the same period last year as oat milk continues to outperform other plant-based categories.
WHAT ARE THE EXPERTS SAYING?
Having upgraded full year forecasts following the company’s increased guidance in August Shore Capital analysts Darren Shirley and Clive Black left their forecasts unchanged.
However, they nudged-up their 2025 and 2026 forecasts by a low single digit percentage. ‘We believe that our forecasts are well-positioned, and if delivered will result in a rerating.’
Liberum also kept forecasts unchanged but maintained a positive view saying, ‘We continue to see significant potential for growth and margin expansion once the transitionary impacts of inflation are over, which should drive significant earnings growth.’
Investment director at AJ Bell Russ Mould commented: ‘Irn-Bru maker AG Barr had some fizz about it as it confirmed full year guidance after a strong first half.
‘Given the wet weather and the impact this could have had on demand, this is a highly creditable outcome and suggests the company’s portfolio of products retains strong appeal.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (Tom Sieber) own shares in AJ Bell.
