A.G. Barr’s first-half profits are declining due to COVID-19 restrictions.
The company recorded extraordinary charges of £11.5 million in the first half of the year.
A.G. Barr says dividend payments could be resumed in 2021.
In a Tuesday announcement, A.G. Barr plc (LON: BAG) said its pre-tax profit for the first half was lower year on year. The company attributed the decline to the coronavirus pandemic, which impacted its first half year sales. COVID-19 has so far infected more than 398 thousand people in the UK and caused over 41 thousand deaths.
A.G. Barr opened on Tuesday on the stock market with a price increase of about 2%. The company’s shares rose by a further 10% in the next few hours. With an intraday high of 424 pence per share, the UK company is still almost 30% down on the year to date. Learn more about the different types of equity investments.
A.G. Barr sees £11.5 million sterling as an exceptional charge in H1
The soft drinks manufacturer, which owns prominent brands such as Funkin, Strathmore, Rubicon and Irn-Bru, reported pre-tax profits of £5.1 million in the six months ended 25 July. This compares with a much higher profit of £13.5 million or €13.5 million in the same period last year.
The Cumbernauld-based company emphasized on Tuesday that its weak first-half results were also due to an extraordinary pre-tax charge of £11.5 million. According to A.G. Barr, this charge was attributed to the impairment of Strathmore and the corporate restructuring program in general.
In terms of revenue, the UK company printed £113.2 million in the first half year compared to £122.5 million in the same period last year. The ongoing health crisis, according to A.G. Barr, has had a broad impact on the nationwide hospitality sector. In related news from the UK, the home improvement retailer, Kingfisher reported annualized growth in its pre-tax earnings on Tuesday.
A.G. Barr said dividend payments could be resumed in 2021.
The company’s board of directors decided to suspend dividend payments earlier this year to support its finances in the midst of the COVID 19 crisis. According to A.G. Barr, disbursements are still under review and should resume in 2021. The company said:
“Although the blocking measures in the UK have been gradually lifted, there is still a high degree of uncertainty associated with other potential COVID-19 outbreaks, such as significant local blockages and the resulting impact”.
A.G. Barr’s performance in the stock market last year was quite subdued with an annual decline of approximately 25%. At the time of writing this article, the British soft drinks manufacturer is estimated at 470.50 million pounds and has a price-to-earnings ratio of 15.86.