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Investing.com -- A.G. Barr's (LON:BAG) shares rose over 2% on Tuesday following the company's sustained revenue growth and a stronger profit outlook for the year ending January 25.
The beverage group, known for brands like IRN-BRU, Rubicon, Boost, and FUNKIN, expects full-year revenues to reach about £420 million, a 5% increase from the previous year's £400 million.
The UK-based company also projected an improvement in its adjusted operating margin, which is expected to rise to around 13.5% from 12.3% last year.
“ Rubicon was the stand-out performer, achieving another year of double digit revenue growth,” the company said in an exchange filing on tuesday.
The tropical drinks brand delivered another year of double-digit revenue growth, while IRN-BRU strengthened its position as one of the UK’s top five carbonated drinks.
Boost, which has been fully integrated into the company’s commercial operations, also saw profitability improve as part of a strategy focusing on value rather than volume.
The company’s FUNKIN brand, known for its cocktail mixers and ready-to-drink products, also showed progress despite challenges in the on-premise market.
“AG Barr is starting to show a good ability to acquire, integrate and boost its portfolio companies, and still has a decent cash pile to think about what the next one might be. Shares had a tougher Q4 but today gives evidence the firm is rebuilding margins and has come in bang on analyst revenue expectations,” in a reaction comment, Robinhood (NASDAQ:HOOD) UK’s lead analyst, Dan Lane, said.
Gains in retail distribution and product innovation supported growth in this segment, helping offset weaker performance in hospitality venues.
A.G. Barr said that its ongoing capital investment program was crucial for future growth. The company invested about £19 million this year, primarily on upgrading production lines at its Cumbernauld site to increase capacity and efficiency.
These investments are expected to support continued brand expansion and operational improvements.
“A.G. BARR is in line to deliver another year of strong top line growth, margin improvement and cash generation.” said Euan Sutherland, chief executive at A.G. Barr in a statement.
The company also ended the year with a healthy balance sheet, reporting net cash of more than £60 million, up from £53.6 million the prior year.
“Turning IRN-BRU from a novelty most of Britain loves to try in Scotland, to an out-and-out staple across the UK is a big challenge but one the firm is clearly making progress in. If AG Barr can keep making gains and taking the rest of the brand stable with it, we could see returns on capital really start to grow, just as the company plans,” Lane added.