By Kristy Dorsey

Irn Bru maker AG Barr is bringing all of its workers off of furlough by the end of this week, but chief executive Roger White has not ruled out the possibility that some jobs will be lost as a result of the coronavirus pandemic.

Speaking after the soft drinks company issued its trading update for the first half of the year, which forecasts an 8 per cent decline in revenues for the 26 weeks to July 25, Mr White told The Herald that about 230 of AG Barr’s 940 employees were furloughed during the height of lockdown restrictions. All will be off the income support programme by the end of this month, though not everyone will immediately return to work.

“It will be dealt with by us rather than the Government furlough scheme,” he explained.

The company’s Strathmore facility in Forfar, which employs 35 people, has been shut since April and will come back into production “over the course of the next month”. Strathmore bottles water for sale to the hospitality trade that is gradually coming out of lockdown.

READ MORE: Cumbernauld-based Irn Bru maker sees sales plunge amid coronavirus lockdown

Other support staff in various locations may not immediately return to work as the Cumbernauld-based company continues to adjust to the new operating environment, Mr White added.

In its trading statement, AG Barr said it expects to confirm “a number” of full-year exceptional items when it reports its interim results in September. This will include compensation from the termination of its sale and distribution contract for Rockstar energy drinks, which is set to come to an end on August 23 following the $3.85 billion acquisition of Rockstar by PepsiCo.

Mr White said there will also be exceptional outlays linked to the company’s “legacy” cost-cutting programme announced last year, which was to deliver annual savings of £2 million in 2019 and 2020. This will lead to an unspecified reduction in headcount.

“Whether we end up augmenting that review has not yet been determined,” he said. “It will depend on what the recovery looks like.”

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The company has no plans to access the return to work “bonus” initiative, in which the Government is providing a one-off payment of £1,000 to employers for every furloughed member of staff who remains in continuous employment to the end of January.

Despite the uncertainties going forward, Mr White said AG Barr remains profitable and cash generative, adding that he is confident the business “will continue to prove its resilience” through this year and beyond.

Assuming the UK does not enter a further significant period of lockdown, the company is anticipating a 12-15% decline in revenues and a “modest” reduction in operating profit for the current financial year. This is against an 8.4% decline in turnover last year, when the UK sugar tax and unhelpful weather meant sales failed to live up to 2018’s record-breaking summer.

The forecast includes estimated adjustments for the loss of Rockstar, which accounted for approximately 8% of group sales volumes last year. It also takes account of how customer behaviour may evolve going forward.

READ MORE: AG Barr reiterates commitment to Rockstar after PepsiCo reveals plans to acquire brand

Mr White said there has been a slow recovery in hospitality and “on the go” consumption in recent weeks, but added it will be a “considerable time” before this returns to pre-Covid levels.

First-half revenue is expected to come in 8% lower than last year at around £113m. This includes a 12% decline during the three months from April to June, when lockdown restrictions were most stringent.

Analyst William Ryder of Hargreaves Lansdown said AG Barr makes relatively few of its sales in bars and restaurants, meaning lockdown had a limited overall impact. However, the comparisons to a fairly weak period last year mean the headline figures “probably flatter”.

“Overall the lockdown period hasn’t been too unkind to the group, but investors will be hoping it can start to remind us why it was so highly rated a few years ago,” he added.

Shares in AG Barr closed 4p higher yesterday at 437p.