AG Barr, the maker of beverage brands Irn-Bru and Rubicon, is "well prepared" for the challenging year ahead, a leading analyst has said.
Nico von Stackelberg of Liberum was commenting on the back of full-year results for the drinks firm, which showed a revenue decline of 8.4% for the year, to £255.7 million (€289.8 million).
Signs Of Recovery
However, following an extensive 'business re-engineering and simplification programme' last year, the group is showing signs of recovery, with its Irn-Bru brand returning to growth this year, it said.
Commenting on AG Barr's performance, von Stackelberg wrote, "AG Barr is entering the COVID-19 environment prepared, with sensible precautionary measures in place.
"It finished the year with £10.9 million of net cash, its £60 million revolving credit facility is now fully drawn and it suspended the final dividend, saving c. £14.5 million."
He added that the company is "doing all the right things" to conserve cash in a challenging period, noting that its board and senior executives are taking a 20% pay cut to their salaries for the next three months.
"It's also worth flagging that AG Barr enters FY2021 knowing all of its cost-cutting levers from the prior year's restructuring," he added.
Returning To Growth
Announcing its full-year results, AG Barr said that it was maintaining a 'strategic focus against challenging prior year comparators'.
As well as Irn-Bru's recovery, it said that recovery plans for its Rubicon and Rockstar brands were being implemented, while its Funkin brand 'continued to perform strongly'.
It has also enhanced its responsibility and sustainability commitments, including increasing the use of recycled PET in its soft drinks portfolio, engagement with Scotland's deposit return scheme, and the roll out of a new 10-year 100% recyclable electricity agreement across all its sites.
"AG Barr is a results driven business with a motivated and resolute team, whom I wish to thank for their ongoing resilience, commitment and flexibility," commented Roger White, the group's chief executive.
"We exited the financial year with improved trading performance and momentum, which continued into the new year however the COVID-19 situation is now materially impacting our business. There is no immediate certainty around the severity and duration of the impact on our business and as such the board is unable to provide guidance for the current financial year at this time."
Commenting on the year ahead for the business, von Stackelberg added, "AG Barr’s cash-generative business and healthy balance sheet enable the group to invest in its brands, route to market, innovation, and bolt-on M&A."
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
