AG Barr shares jumped on Tuesday after the London-listed beverages group said it was on track to secure double-digit annual profit growth.
The FTSE 250 firm told investors that Scottish-favourite Irn-Bru is now ‘one of the top five carbonates in the UK’, while Rubicon had proved a ‘stand-out performer’ in 2024 with another year of double digit revenue growth.
The firm’s FUNKIN brand, known for its cocktail mixers and ready-to-drink products, showed signs of progress, despite challenges in the on-premise market that have weighed this year.
AG Barr, which also owns the Boost brand, expects to post revenues of around £420million for the 12 months to 25 January, reflecting a 5 per cent increase from the previous year’s £400million.
Its adjusted operating margin is expected to show ‘strong improvement’ and climb to 13.5 per cent by the end of the period, up from 12.3 per cent a year ago.
The group expects higher revenue and improved margins to help ‘drive double digit profit growth’.
Boss Euan Sutherland said: ‘These headline metrics highlight excellent progress towards our long-term financial goals.
‘We have sustained brand momentum despite the well trailed wider market pressures, and continue to make good progress towards our margin target.’
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AG Barr shares rose 6.17 per cent or 36p to 619p on Wednesday, having risen over 11 per cent in the last year.
Sutherland added: ‘AG Barr is in line to deliver another year of strong top line growth, margin improvement and cash generation.
‘We are committed to consistent long-term revenue growth and have confidence in further margin improvement as per our previous guidance.
Investment plans to lift AG Barr shares from the doldrums?
AG Barr shares are still down roughly 2.4 per cent over the last six months and have eked out just 1.7 per cent growth over the last five year.
Senior investment manager at RBC Brewin Dolphin John Moore said that while AG Barr shares have ‘been in the doldrums of late’, the group’s latest trading statement ‘should remind investors of the business’s core qualities’.
He added: ‘The Irn Bru maker is not sitting on its laurels, with a £24million investment in capex and strategic initiatives this year underlying its long-term ambitions.
‘Meanwhile, cash to hand of £60 million provides management with the opportunity to consider further acquisition targets.’
Dan Lane, Robinhood UK’s lead analyst, said AG Barr ‘needs to see Funkin start to prove itself now’.
He added: ‘AG Barr is starting to show a good ability to acquire, integrate and boost its portfolio companies, and still has a decent cash pile to think about what the next one might be.
‘Shares had a tougher Q4 but today gives evidence the firm is rebuilding margins and has come in bang on analyst revenue expectations.
‘Turning IRN-BRU from a novelty most of Britain loves to try in Scotland, to an out-and-out staple across the UK is a big challenge but one the firm is clearly making progress in.
‘If AG Barr can keep making gains and taking the rest of the brand stable with it, we could see returns on capital really start to grow, just as the company plans.’
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