The post-Covid rebound in on-the-go consumption boosted drinks group AG Barr and travel retailer SSP Group this week, though concerns remain over tougher trading conditions to come.

Irn-Bru owner AG Barr posted first-half sales growth of 16.7% in the 26 weeks to 31 July to £157.9m, up 20% on a like-for-like basis. Both its business units saw strong growth, with Barr Soft Drinks up 12.3% and Funkin up 21.4%.

Growth was driven by the return of on trade, out of home and the warm summer weather as well as ongoing brand investment, pricing increases and a focus on promotional activity.

Although margins were affected by cost inflation, they were also supported by sales growth. Therefore, adjusted operating profit margin was flat at 16.2%, with adjusted profit up 22.8% to £25.3m, taking into account an additional week last year and the sale of property, as well as an adjustment related to its Moma acquisition.

However, due to the impact of cost pressures, brand investment and reduced consumer confidence, the group said it did not anticipate sustaining current margins through the second half.

Peel Hunt commented: “The core category growth was largely driven by price, however volumes also improved, which is a good sign of the brands resilience. However the exceptional summer weather could be masking some of the true impact on consumer behaviour.”

Liberum lowered its price target for the stock, reflecting lowered forecasts and increased risks from commodity inflation and sterling depreciation, while forecasting volumes would remain under pressure.

AG Barr shares lost 1.2% and a further 5% on Wednesday on broker downgrades to 467p, before setting a new annual low of 452p on Thursday.

SSP Group also rode the rebound in out-of-home consumption as travel numbers bounced back during its financial year.

For the full year, revenues are expected to be at 91% of pre-Covid 2019 levels thanks to rising passenger numbers. The performance also includes the benefit from net contract gains and price increases compared with the same period in 2019.

For the current full year, the group now expects sales of approximately £2.17bn and EBITDA of approximately £140m, slightly ahead of previous full-year guidance and helped by its management of inflationary cost pressures through productivity and pricing initiatives.

Jefferies commented: “Cost inflation and the macro outlook has impacted the shares recently—we think this clarity on the recovery will be well-received.” Liberum added: “The business is increasingly focused on higher growth markets around the world, and investor fears surrounding UK rail is overdone.”

The shares are down 29% so far this year and lost a further 8.2% to 194.2p this week on concerns over the UK economy. The shares were trading at over 550p before Covid.

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