AG Barr PLC (LON:BAG) said the government’s lockdown measures to prevent the spread of coronavirus are denting sales, though it is too early to quantify losses.
The soft drinks producer said the ‘impulse’ channel, which consists of customers making unplanned purchases and accounts for 40% of the total revenue, has been “significantly” reduced.
READ: For AG Barr and others, Scottish bottle deposit scheme could be new normal
Another area to take a big hit has been the ‘out of home’ consumption, as bars and pubs are closed, while ‘take-home’ purchases have been “more resilient” albeit “more volatile than usual”.
The Irn Bru seller said it is taking cost-cutting measures, such as scaling back marketing, furloughing employees and cutting the board’s salary by 20%.
It is also not recommending a final dividend for the financial year to 25 January.
The period ended with £11mln in cash and £60mln drawn down from a revolving credit facility.
Full-year revenue dropped 8% to £255mln, while profit before tax slipped 17% to £37mln due to weaker consumer sentiment caused by political uncertainty, plus strong comparatives in the exceptionally hot summer of 2018.
Analysts at Liberum, which have a ‘hold’ recommendation and 580p target price, said AG Barr is “well prepared for this challenge” thanks to the cost-saving plans.
“We believe AG Barr can sustainably grow organic sales at circa 3% per annum in a 'normal year', driven by distribution gains and innovation.”
Shares dropped 3% to 492.5p on Wednesday morning.