The resurgence of the leisure sector and out-of-home consumption helped propel Irn-Bru maker AG Barr back above pre-Covid levels.

For the 53 weeks to 30 January, AG Barr’s revenues were up 18.3% year on year to £268.6m, as it bounced back from impact of the pandemic and the resulting close to hospitality. It was also up 5% on pre-Covid revenues.

The soft drinks maker saw volumes spike across its core portfolio, with carbonated drinks and Funkin cocktails both in strong growth. Both volume and mix were boosted, particularly in the first half, by the relaxation of Covid restrictions and the reopening of the hospitality sector. Sales were also supported by product innovation and £6m of revenue from an extra week of trading.

Barr Soft Drinks, which represents over 85% of group sales and gross profits, returned to revenue growth with strong volume gains, helped by the launch of Rubicon Raw Energy to mitigate its loss of the Rockstar franchise.

Meanwhile, Funkin’s revenue more than doubled, up £19.9m to £36.9m as it benefited from the reopening of the hospitality sector. It also enjoyed success in its grocery business as at-home cocktail consumption continues to grow in the wake of Covid restrictions.

Increased costs related to supply chains and freight networks, coupled with increased marketing spend, saw operating costs rise by 25%, but operating margins improved 83 basis points to 15.6%. This helped to deliver profit before tax of £41.5m – which was a 26.5% improvement year on year.

AG Barr warned it was facing “significant inflationary pressures” but pledged to manage its exposure through revenue management, procurement and cost controls as well as price.

“While other companies buckle under soaring inflation, the business could show it’s made of steel,” Begbies Traynor noted. “Much of AG Barr’s sales are impulse buys or from promotional deals, which are less likely to be hit as consumers see their spending power eroded as they hunt out cheap pick-me-ups.”

AJ Bell cautioned that “sustaining this positive momentum won’t be easy”, but added: “While it couldn’t have foreseen the Ukraine war pushing up the cost of living further, AG Barr last year taking steps to diversify its income might prove to have been a wise move. An investment in plant-based foods group Moma gives it a position in the foods sector and a new avenue through which to explore earnings growth opportunities.”

The company’s shares rose 2.3% on Tuesday to 544p on the results and are now up 8% year on year, though they remain below the 600p levels it enjoyed pre-Covid.

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