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Irn-Bru maker A.G. Barr flags margin hit in short term, shares down

FILE PHOTO: Bottles of Irn-Bru drink, produced by drinks manufacturer A.G. Barr, are displayed in a supermarket in London

(Reuters) -A.G. Barr on Tuesday warned of an operating margin hit in the short term from inflationary pressures and acquisitions, even as the Irn-Bru maker forecast annual profit growth in line with its expectations.

Shares of the company were down about 1.5% in early trade.

Beverage makers have been grappling with high costs of energy and raw materials, while consumers are also cutting back spending on non-essential items amid sticky inflation.

High inflation and the planned introduction of the Scottish Deposit Return Scheme (DRS) in August 2023 have potential to impact consumer purchasing behaviour, CEO Roger White said in a statement.

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Consumers in Scotland will pay a 20 pence deposit under the scheme when they buy a drink in a single-use container, which then get back when they return the empty bottle or can.

Most beverage companies have hiked prices in a bid to pass on some of the costs to their consumers. Fevertree Drinks, which makes tonics and cocktail mixes, said it had raised prices of its products to deal with high costs, while Coca-Cola HBC AG, one of Coca-Cola's many bottlers worldwide, said in February it would increase prices.

A.G. Barr reported a 13.3% rise in adjusted profit before tax for the year ended Jan. 29 to 43.5 million pounds ($53.58 million).

Analysts on average had expected a profit of about 42.9 million pounds, according to a company-compiled consensus of analysts' forecasts.

($1 = 0.8119 pounds)

(Reporting by Radhika Anilkumar in Bengaluru; Editing by Subhranshu Sahu)