Irn-bru maker to take financial hit as virus dilutes sales

● Factories continue to produce goods but group scraps shareholder dividend

Irn-bru maker AG Barr is bracing itself for a “material adverse impact” to its financial performance as sales are hit hard by the coronavirus lockdown but has pledged to keep supermarket shelves stocked.

The soft drinks group said there had been a significant downturn in “out of home” consumption following the closure of pubs, restaurants and other hospitality venues, leaving mainly takeaways as a source of trade.

Bosses noted that takehome purchases from food stores and supermarkets that remain open have been “more resilient” although sales since 23 March have proven to be “more volatile than usual”.

“As a result, we expect there to be a material adverse impact to the group’s financial performance due to these fast changing circumstances, however at the current time the quantum of this remains uncertain,” the firm told investhe tors as it also released its 2019 financial results.

Those figures had been pushed back from last month when the group said it was taking action to ensure that its factories were staffed sufficiently during the Covid-19 crisis but warned that it was scaling back marketing and commercial activity.

Chief executive Roger White said the Cumbernauld-based firm’s production and logistics sites remained operational. He also revealed that about 180 of the company’s 900-odd staff would be furloughed. A tighter range of products is helping the business deal with the current situation.

Barr, which is also behind the Rubicon, Strathmore and Funkin brands, has scrapped its final shareholder dividend as a result of the health emergency but highlighted its strong financial base and “robust” balance sheet. Bosses have had to draw down a £60 million revolving credit facility in full.

White said: “There is no immediate certainty around the severity and duration of impact on our business and as such the board is unable to provide guidance for the current financial year at this time. However, the actions we are taking to conserve cash and reduce costs, combined with our strong financial base, give us confidence in the resilience of our business for the long term.”

The results for the year to 25 January showed that revenue fell 8.4 per cent to £255.7m, while statutory profit before tax was down 16 per cent to £37.4m.

Barr said that its core Irn-bru brand had returned to growth in the final quarter while recovery plans for Rubicon and Rockstar had been implemented.

Analysts at house brokerage Shore Capital noted: “More recent trading has been impacted by Covid-19, in parts materially so, and management has reiterated it remains unable to provide any guidance [for the current year].

“We believe the group has adequate liquidity to ride-out the current crisis, and a well invested stable of brands from which it can drive growth over the medium to long-term.”