Business

Soft drinks giant Irn-Bru owner slashes costs as inflation surges

Irn-Bru owner AG Barr has signalled moves to cut costs and pass on price rises to customers as it responds to surging inflation.

The Scottish soft drinks giant revealed it had taken the action as it raised profit guidance and told the City it expects to report revenue of around £267 million for the year ended January 30, up 17.5 per cent on the year before. Barr said revenue would be “marginally ahead” of guidance issued in November and “exceeds” its pre-pandemic performance of £255.7m in 2019/20, which also included £21m of income from the Rockstar energy drink brand.

The Cumbernauld-based company said its “strong trading performance” came in spite of the challenges posed by the Omicron variant and fresh restrictions brought in by government in December.

But the company highlighted the impact of annual consumer price inflation, which is expected to rise to around six per cent in spring.

Barr said: “The inflationary pressures highlighted in our November 2021 update have materialised as expected, particularly across packaging and energy linked commodities.

“We have initiated several cost control actions to reduce the impact of these rising costs and have adjusted our pricing with customers where appropriate. With the published rate of inflation in the UK now above 5%, the highest level for 20 years, we will continue to seek opportunities across the coming year to offset the impact on our business.”

Barr declared its operating margin before exceptional items would be around 15.6%, up from 14.8%, and expects to end the year with about £66m of net cash following the completion of its equity investment in MOMA Foods, the porridge and oat milk maker.

Chief executive Roger White said: “We are delighted with both the resilience our business has demonstrated and the growth we have delivered. We have remained fully operational throughout the year, producing high quality products and providing strong business support to all of our customers.

“We have delivered an excellent financial performance against a volatile backdrop, whilst at the same time delivering on our strategic priorities, with particularly encouraging progress made across our No Time To Waste environmental sustainability programme.

“We plan to further invest in our business in 2022/23 and remain confident in our ability to deliver continued growth in both revenue and profit in the coming year.”

Shares were up 5p, or 1%, at around 500p in early trading.

 

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