IRN-BRU maker AG Barr has hailed a resilient year with profits and sales down but with £50 million on the balance sheet to help spur growth out of the coronavirus crisis.
The Cumbernauld-based soft drinks giant said it is hoping for “some degree of normality arriving back to the UK over the course of the next few months” as it posted its annual results for the year ended January 31.
It reported statutory pre-tax profits plunging 30.5 per cent to £26 million for the year to January 24 as sales fell 11.2% to £227m.
Without exceptional items, including a Strathmore impairment after a lockdown review of the hospitality targeted brand and Rockstar compensation over the early termination of the franchise, it said profit before tax was down 12% at £32.8m.
Sales across the bars and pubs sector sagged with the weight of repeated lockdowns in the pandemic and AG Barr was unable to offset this despite surging trade at supermarkets and convenience stores.
The group, which also makes Rubicon, said restrictions since December, alongside the end of its contract to sell and distribute the Rockstar energy drinks in October, left second-half sales tumbling 14.6%. AG Barr kept dividends on hold, having paused them last April, but said it remains committed to restarting pay-outs in the current 2021-22 financial year.
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Roger White, AG Barr chief executive, said the year started against the backdrop of lockdown but now there is appears to be a route out.
“It was one of the most unusual of years where the soft drinks market has proved to be resilient in what has been difficult times for many and our brands and our business have been resilient as well,” he said. “Despite having a significant amount of our business in on-the-go and hospitality, and all of those have had a horrific time and we really feel for those customers, we have still managed to salvage a year which I would say is pretty robust.
“Importantly we have continued to generate cash throughout the year and we end up the year with £50m of cash on our balance sheet so all things considered a very tricky, difficult year but we have seen some positive things out of it as well, and we look forward with a positive view into this new financial year and hope we can see a roadmap out of the current lockdowns and hopefully if we see the vaccination programme rolling out then we can see some degree of normality arriving back to the UK over the course of the next few months.
He said the firm “fully anticipates” recommencing dividend payments “during the course of 2021”.
He said: “The decision that the board took from last March through to now was that financial security and the long term financial probity of the business came first and we are still in a crisis, we are still in a pandemic but we can now see a way out of that and with a strong balance sheet that we have there is clearly no issue from a cash payment point of view.
"But we just felt it was the right thing to do having taken all the steps we had done over the course of last year not to rush into paying dividends out but to give a clear signal that we intend to start during the course of this year.
“We will continue to invest in the business.”
He said the capital programme last year was “somewhat constrained through the executional challenges of contractors and keeping employees safe” but £8m is in the capital plan for this year.
“If we get the opportunity to utilise the balance sheet to grow the business then we will consider that as it comes,” he said.
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AG Barr said it is benefiting from the trend for locked-down Britons to drink cocktails at home, which is boosting demand for its Funkin ready-to-drink cocktails.
It is also investing in the growing energy drink market, recently launching Rubicon RAW Energy and driving sales for its Irn-Bru Energy brand.
Irn-Bru sales dropped 6.5% over the year, which it said was a "robust" performance in the pandemic, helped by rising demand for Irn-Bru Energy and Irn-Bru Xtra.
Shares closed down 6.7%, or 35p, at 486p.
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