Update: AG Barr
Relegation from the FTSE 250 to the FTSE Small Cap index makes not a jot of difference to the day-today operations of soft drinks maker AG Barr, but it does unfortunately reflect investors’ lack of interest in the Scottish firm right now and this column’s positive view continues to fall flat – we are now sat on a paper loss of some 37pc. However, the last trading update in late July offered enough to keep us interested for now.
It was no surprise to learn that lockdown had been bad for business at the maker of the Irn-Bru, Rubicon and Funkin drinks ranges. But firsthalf sales fell by just 8pc year-onyear as take-home purchases from major retailers held up well, even as sales in pubs, bars and restaurants understandably collapsed.
Moreover, there are tentative signs of a pickup in demand as Britain slowly emerges from spring’s nationwide lockdown and, perhaps most reassuringly of all, AG Barr continues to generate positive cash flow. That further bolsters a balance sheet that had only a tiny net debt position even when £7.9m of leases and a £10.5m pension liability were taken into account. This is another one where patience will be required while the balance sheet provides protection against further falls. Hold.
Russ Mould is investment director at AJ Bell, the stockbroker