AG Barr (BAG) expects profits to beat expectations
By Rob Griffin
08:57, 29 November 2021
Shares in AG Barr rose today after the maker of Irn Bru revealed that full-year profits should be ahead of market expectations.
In an update, the Scottish soft drinks producer said the recent positive trading momentum had continued – even after the challenging supply chain environment.
It now expects revenue to be in the region of £264m ($352m) for the full year with pre-tax profit coming in at around £41m.
Sales ahead of expectations
The news was enough to send the company’s stock up 5% to 489.28p during early trading on the London markets.
The company said sales had “grown ahead of expectations” across both its Barr Soft Drinks and Funkin business units.
“Our performance in both the ‘on the go’ and hospitality sectors remains particularly strong and our recent innovation launches have exceeded our expectations,” it stated.
What is your sentiment on BAG?
Buy recommendation
Wayne Brown, an analyst at Liberum, has a ‘buy’ recommendation on the stock and believes the trading update gives cause for optimism.
“Another upgrade two months before year-end suggests a high degree of confidence and more to come is now highly likely,” he said.
He also suggested that investors should look to buy into annual compounders with high levels of predictable revenue streams.
“AG Barr is an annual compounder where performance is highly sustainable and dependable,” he added.
Supply chain issues
In its statement, AG Barr admitted the current supply chain environment was challenging but reassured investors that this hadn’t disrupted the business.
“Our production and wider supply chain have maintained their resilience and supported the growth in volume we are experiencing,” it stated.
However, it continues to keep an eye on the ongoing coronavirus situation and plans to provide a further trading update in early February.
“The fast-moving situation in relation to the Covid-19 pandemic remains a risk, however, we expect our revenue momentum to continue into 2022,” it added.