TIDMBAG
RNS Number : 2185U
Barr(A.G.) PLC
28 July 2020
28 July 2020
A.G. BARR p.l.c.
("A.G. BARR")
Trading update
A.G. BARR p.l.c., ("A.G. BARR" or the "Group"), which produces
and markets some of the UK's leading drink brands, including
IRN-BRU, Rubicon and Funkin, today announces a trading update in
respect of the 26 weeks ended 25 July 2020.
Safety, wellbeing and operational resilience
As the COVID-19 situation has evolved, safety and wellbeing have
been our number one priority. Having successfully introduced a
range of enhanced safety and hygiene measures across all our
operations, we have maintained continuity of production and
continued to deliver a high level of customer service and
quality.
Trading
We ended the 2019/2020 financial year with an encouraging sales
performance which continued into the first 8 weeks of the new
financial year. However, following the UK-wide commencement of
lockdown on 23 March 2020, we entered a period of significant
trading volatility, initially characterised by consumer stockpiling
and then a general shift towards larger, less frequent take-home
purchasing. We were also exposed to the complete closure of the
hospitality sector as well as a material reduction in the "out of
home" consumption of soft drinks.
While these shopping and consumption patterns continued
throughout the "full lockdown" period across April, May and June,
we believe sales benefited from the favourable weather during this
time. As lockdown measures have recently started to ease, we are
seeing sales in the hospitality and 'on the go' consumption
segments beginning to recover, albeit slowly.
Against this backdrop, revenue for the 26 weeks ended 25 July
2020 is expected to be c.GBP113m, a c.8% decline on the prior year
(2019 : GBP122.5m). For the 3-month period April to June, revenue
declined c.12% against the same period in the prior year.
The impact of COVID-19 caused considerable variability in
trading patterns across our key customer channels during full
lockdown as detailed below :
Customer channels
Impulse Major retail Hospitality Other TOTAL
============ ============== ============= ============ ===========
Group revenue % split for
FY 19/20 c.40% c.43% c.10% c.7% 100%
============ ============== ============= ============ ===========
Estimated net revenue index c.90 index c.110 index c.5 index c.80 index c.88 index
Apr-Jun 20 versus same 3
months in prior year
============ ============== ============= ============ ===========
Barr Soft Drinks
The latest IRI Marketplace data shows the total UK soft drinks
market increasing in value by 1.2% and in volume by 2.4% for the 20
weeks to 14 June 2020. Against this market backdrop we have
maintained our total market value share and have seen a
strengthening of our position within Scotland, with value share up
3.8%.
Funkin
The Funkin business has been materially impacted by the
challenging hospitality environment, however this has been
partially offset by a marked increase in retail and on-line sales,
with the nitro infused ready-to-drink cocktails in particular
delivering a strong performance.
Financial stability
In light of the uncertainty arising from the COVID-19 pandemic,
we took a number of precautionary measures across the period to
underpin our existing strong financial position. The business
continues to generate positive cash flow and as a consequence our
balance sheet remains strong.
In respect of government support, by 31 July we will have
brought to a close our use of the Government's Job Retention Scheme
and do not intend to access the additional return to work "bonus"
initiative.
Outlook
Given the difficult prevailing circumstances the business has
responded well to the challenges we have faced and has delivered a
creditable performance in the first 6 months of trading,
notwithstanding the relatively weaker comparative trading period in
the prior year.
As the country gradually emerges from lockdown there remains a
high level of uncertainty around the balance of year trading, in
terms of both shopping behaviours and consumer consumption
patterns.
Our current scenario planning, based on an underlying assumption
that the UK will not enter into a further significant period of
lockdown, suggests that our full year revenue performance for the
year ending January 2021 will be in the region of 12-15% below the
prior year, with a modest reduction in operating profit margin
reflecting the impact of sales mix and operational de-leverage.
This scenario incorporates the estimated adjustment for Rockstar no
longer being part of our portfolio for the final quarter of the
financial year, as well as our expectations of how customer channel
dynamics will evolve as lockdown eases.
We expect to confirm a number of full-year non-recurring
exceptional cash and non-cash items at the Interim results in
September, including the previously communicated compensation
associated with the termination of our sale and distribution
contract with Rockstar Inc.
Roger White, Chief Executive Officer, commented :
"I am incredibly proud of how our teams across the business have
responded to the COVID-19 pandemic. These have been difficult times
for everyone however, despite the challenging environment, we have
maintained our quality and service standards, thanks to the
dedication and adaptability of our people. We are a profitable and
cash generative business in a robust drinks sector and I am
confident that our business will continue to prove its resilience
for the balance of the year and beyond".
For more information, please contact :
A.G. BARR 0330 390 3900 Instinctif Partners 020 7457 2010/2005
Roger White, Chief Executive Justine Warren
Stuart Lorimer, Finance Director Matthew Smallwood
Next update : Interim Results - 22 September 2020
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END
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