AG Barr (BAG.L), the maker of the famous bright orange-coloured Scottish fizzy drink Irn-Bru, revealed that its half-year profits cratered by nearly 63%.
It said in its interim results that coronavirus restrictions had weakened sales in pubs and other outlets, which hit its bottomline.
“While UK-wide lockdown measures have been gradually lifted, there remains a continued high degree of uncertainty associated with further potential COVID-19 outbreaks, such as significant localised lockdowns, and the resulting impacts,” AG Barr said.
For the first six months of the financial year, the group said hospitality customers fell by around 65%, peaking at around 95% during the full lockdown period, which hit sales.
In another potential blow to AG Barr and others, the UK government warned on Monday that further restrictions may come for pubs and restaurants, in order to mitigate the spread of coronavirus as cases start to rise.
“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 six months of trading, notwithstanding the relatively weaker comparatives of the prior year,” the group said.
“Our current scenario planning, based on an underlying assumption that the UK will not enter into a further significant period of lockdown, continues to indicate 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 adverse sales mix and operational de-leverage, mitigated by our strong delivery of ongoing overhead cost savings.
“Despite the challenging environment, we have continued to invest in our core brand equity for the long term, maintained our quality and service standards and remain a profitable and cash generative business in a robust drinks sector. We are confident that our business will continue to prove its resilience for the balance of this year and beyond.”