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Acquisitions and organic sales growth helped AG Barr increase its revenue by a third in the first half, but profits were hit by falling operating margins and a sharp rise in costs.
In its half-year results report to July 30, the Irn-Bru maker said its turnover was £210.4 million compared to December 2022, up 33% on a reported basis, thanks to the acquisition of Boost Drinks.
Sales increased by 10.4% year-on-year.
In the soft drinks sector, sales growth was driven by volume, price and mix, with Irn-Bru increasing sales by 8% and increasing its market share in England and Wales. The Rubicon brand had a very good period with sales growth of 17%.
The Boost brand grew by 37% and recorded excellent volume growth thanks to significant sales growth.
Funkin achieved additional growth of 11% overseas in the UK, supported by increased investment in consumer marketing and continued innovation.
At Moma Foods, investments in brand and consumer marketing supported strong sales growth of 24% year-over-year as oat milk continues to outperform other original milk categories plant.
Reported pre-tax profit for the period increased 12.6% to £27.8 million, driven by higher revenues across the group, particularly strong volume growth and an increase in market share of non-alcoholic drinks.
Adjusted profit for the period was £27 million, an increase of 6.7% on the first half of last year, while margins fell from 16.2% to 12, 5%.
This decline in profitability is in line with expectations, with the Group affected by continued cost inflation as well as the known short-term impact of the lower-margin Boost division.
Additionally, margins were impacted by the decision not to fully pass on the impact of cost inflation to customers in order to remain focused on offering affordable brands.
The group's mid-term plan to restore operational profitability is delivering "good results", supported by brand and portfolio development, optimization of group production and disciplined cost control.
In August, the company announced that its annual profits would be slightly above analysts' consensus. Despite the long period of bad weather in the summer, the Group remains confident in its ability to meet these new market expectations.
“We have made significant financial and strategic progress in the first half of the year and have exciting plans for the remainder of the year to maintain our growth momentum,” said CEO Roger White.
“We remain confident that we will generate full returns consistent with our recently increased market expectations and that we are well positioned to deliver strong long-term returns to shareholders.”
AG Barr shares rose 2.1% to 494.9p.
Morning update
Beauty company PZ Cussons recorded double-digit annual growth and remained profitable after benefiting from the acquisition of Childs Farm and strong organic growth.
Reported sales increased 10.7% to £656.3 million, driven by a 6.1% rise in like-for-like sales, a contribution from Childs Farm, acquired in March 2022, and foreign exchange momentum. favorable.
Organic growth of 6.1% reflects price/mix growth of 12.1% and volume decline of 6.0%.
Childs Farm contributed £10.9 million to the increase in sales, while gradual changes in exchange rates, reflecting the weakening of the pound sterling against most reported currencies, contributed to the tune of £15.7 million.
The group saw gains across most of its core brands, with Carex, Sanctuary Spa and Cussons Baby down this year.
Organic sales growth in the fourth quarter of the year was 6.7%, driven by a price/mix improvement of 11.2% and a volume decline of 4.5%.
Overall adjusted operating margin remained stable, with gross margin increasing by 80 basis points. funded larger capacity investments and offset cost inflation.
Sustained sales growth in Nigeria contributed to a 12.6% increase in the group's adjusted profit before tax; However, the impact of tax pressure and the increase in minority interests led to a decline in adjusted earnings per share of 10.7%.
Operating margins fell 200 basis points on a statutory basis and earnings per share fell 26.8%, reflecting the sale of the Sanctuary Spa brand for £16.5 million and increased related investment. to the transformation.
Performance in the new financial year has been in line with expectations so far, with moderate like-for-like sales growth and higher operating profit margins.
The group said sales growth in Nigeria and New Zealand continued, with a flat performance in the UK offset by further declines in Indonesia.
Looking ahead, he said Nigeria's macroeconomic environment, including the foreign exchange market and other tax reforms, will be a critical factor in our group's overall financial performance in 2024.
The company said it has a number of operational and corporate plans to address these issues and is already implementing some of them to improve its business performance.
Overall, the Group is expected to achieve organic sales growth for the fourth consecutive year, with continued strong operating profit growth at constant exchange rates thanks to changes already made to strengthen the business, as well as a slightly more stable cost environment. soft.
CEO Jonathan Myers commented: “Since launching our strategy almost three years ago, we have achieved comparable sales growth and operating profit growth of more than 10% for the third year in a row. We achieved these improvements by investing in our brands, capabilities and being cost conscious. We better serve consumers through targeted innovation and productivity initiatives that help us reduce complexity across the group.
“The group's performance in the new financial year was in line with our expectations and with clear short-term priorities, we expect another year of results from LFL and continued strong growth in foreign currency operating profit in 2024. There is still lots of work to do." To do." We strive to achieve the maximum Maximize the potential of the business, and Nigeria has well-documented challenges to overcome. However, we continue to believe that we can generate greater growth, higher margins and a simpler and more sustainable activity.”
Finsbury Food Group , which is set to float on the stock market in a £143.4m buyout from investor Frisbee Bidco, has reported strong annual growth but its profits have been hit by continued inflation in prices. costs.
Group turnover for the financial year ending July 1, 2023 increased by 16% to £413.7 million.
This increase results from an increase in volumes of 1.7%, including the acquisition of Lees in the second half, and a price increase of 14.3%.
The recovery of the hospitality sector is the main driver of this growth, with revenues up 25.1% year-on-year and UK retail sales up 11.8%.
Sales at Finsbury's overseas division also increased by 25% thanks to a strong performance in confectionery in France.
Overall performance was boosted by good momentum in the second half, with half-year sales up 17.1% year-on-year.
Group adjusted operating profit of £19.8 million increased by 10.9% year-on-year driven by the Lees acquisition, growth in overseas markets and continued success of the excellence program operational in the United Kingdom.
However, issues related to persistent and significant cost inflation weighed on adjusted operating profit, which came in at 4.8%, slightly below last year's 5%.
Gross margin decreased 2.4 percentage points to 30.0%, as it continued to be impacted by significant cost inflation.
Managing Director John Duffy said: “Achieving sales figures in line with market expectations, given the significant macroeconomic challenges we have had to overcome, is testament to our sustainable business model and our ability to adapt to market trends. customers and the commitment of our leaders. teams. Across the group, we are seeing strong performance in UK retail, continued recovery in UK foodservice and continued growth in our overseas division.
“The Group's relentless focus and commitment to our strategic objectives has not wavered and we are building on the strong foundations of our Group's platform of scale and continually progressing towards excellence. We will continue this work in the coming years and embark on a five-year automation journey that will be a game-changer for the group.
“Looking ahead, we are starting to see inflationary pressures ease, spending remains inflationary, and we expect to face further macroeconomic challenges in the current fiscal year.” “We will continue to serve our customers through our various ranges and supply channels.”
Finally, the supplier of consumer goods and electronic cigarettes Supreme published an activity report this morning ahead of its annual general meeting.
During the financial year ended March 31, 2023, the group reported "solid business", achieving significant growth in its e-cigarette business and strong organic growth in other categories.
This momentum has continued to build during the first half of the current financial year and we remain on track to “deliver our best financial performance as a publicly traded company.”
Following record profit growth in the first half of fiscal 2024, the company expects business performance for the fiscal year ending March 31, 2024 to be well above market expectations.
The company issued revenue guidance of approximately £195 million to £205 million and adjusted EBITDA guidance of approximately £28 million to £30 million, or $3.5 million. pounds sterling above market expectations.
Around £2 million of this EBITDA growth came from its own business, with around £2 million of additional adjusted EBITDA coming from the ElfBar brand opportunity, while around £1.5 million pounds sterling comes from the main activity.
Additionally, the working capital investments supporting Elf's opportunity were better managed than expected, meaning the company now expects to have a stronger mid-year and end-year liquidity position than initially planned.
Management now expects the sales contribution of the Elf and Lost Mary brands in 2024, under current legislation, to be approximately £4 million of adjusted EBITDA on sales of approximately £40 million. of pounds sterling.
The vaping category remains a key growth driver for Supreme and continues to attract significant demand for vaping products from major retailers, with particularly strong demand for our flagship 88Vape brand.
Given recent regulatory concerns surrounding single-use vaping, he said: “As an industry leader, Supreme is aware of the broader issues surrounding youth vaping and continues to fully support any proactive measures or legislative changes likely to have an impact on certain products, packaging and aromas. , etc. “Restrict sentiment from selling to the UK. »
He added: “The board remains pleased with the group’s continued strategic financial and operational progress and believes that we are ideally placed to realize our growth potential in the medium to long term.”
On the markets this morning, the FTSE 100 index fell another 0.2% to 7,612.9 points.
Gainers included Britvic, up 2.1% to 888.5p, Nichols, up 1.6% to 1,026.6p, and Ocado, up 1.6% to 667.4p.
Losers included Just Eat Takeaway.com, down 1.7% to 1,062p, Coca-Cola Europacific Partners, down 1.3% to 59.2p, and Pets at Home, down 0.9% at 339.6p.
yesterday in town
The FTSE 100 started the week lower, falling another 0.8% to 7,624 points.
Consumer goods and food, including Imperial Brands, fell 5.7% to 1,639.5p. Takeaway.com, up 3% to 1,080p, Deliveroo, up 2.8% to 112.4p, Pets at Home, up 2.5% to 342.6p and SSP Group, up 2 .3% at 210p.
The day's few gainers included THG, up 1.5% to 70.2p, and Bare Wines, up 1.4% to 59p.
