A.G. Barr has warned of an operating margin hit in the short term from inflationary pressures and acquisitions, even as the Irn-Bru maker forecast annual profit growth in line with its expectations.
Shares of the company were down about 1.5% in early trade.
Beverage makers have been grappling with high costs of energy and raw materials, while consumers are also cutting back spending on non-essential items amid sticky inflation.
High inflation and the planned introduction of the Scottish Deposit Return Scheme (DRS) in August 2023 have potential to impact consumer purchasing behaviour, CEO Roger White said in a statement.
Consumers in Scotland will pay a 20 pence deposit under the scheme when they buy a drink in a single-use container, which then get back when they return the empty bottle or can.
Price Hike
Most beverage companies have hiked prices in a bid to pass on some of the costs to their consumers. Fever-Tree, which makes tonics and cocktail mixes, said it had raised prices of its products to deal with high costs, while Coca-Cola HBC AG, one of Coca-Cola's many bottlers worldwide, said in February it would increase prices.
A.G. Barr reported a 13.3% rise in adjusted profit before tax for the year ended 29 January to £43.5 million (€49.5 million).
Analysts on average had expected a profit of about £42.9 million (€48.8 million), according to a company-compiled consensus of analysts' forecasts.
White stated, "Over the past 12 months we delivered an excellent financial performance and made significant progress across our strategic objectives, an achievement only made possible by our committed and hardworking teams.
"Our strategy to build and develop a multi-beverage portfolio capable of significant long-term growth is progressing well. We are now in an investment phase, designed to capitalise on the strategic growth opportunities ahead."
Read More: Record Food Inflation Figures Putting Pressure on UK Households: McKinsey
News by Reuters, additional reporting by ESM – your source for the latest A Brands news. Click subscribe to sign up to ESM: European Supermarket Magazine.
