Irn-bru maker warns of margin pressure as inflation soars

Irn Bru is seen on the shelves of Scotch Corner in Pitlochry, Scotland, Britain May 10, 2018. REUTERS/Russell Cheyne/
  • Warns on second-half margins
  • Sees no direct impact from weaker sterling
  • Profit rises 23%

Sept 27 (Reuters) - The British maker of the orange fizzy drink Irn Bru on Tuesday flagged a hit to its second-half margins as it grapples with rising costs and consumers curbing their spending.

A.G. Barr (BAG.L) imports raw materials such as mangoes and aluminium, but CEO Roger White shrugged off any direct or short term impact from a weaker pound that has roiled British markets.

"We will just see how (the) sterling performs, we are hedged in the short, immediate term, but we replace those hedges on an ongoing basis. We will just have to turn with the market," White told Reuters.

The British pound fell to an all-time low against the dollar on Monday as investors worried that Britain's new economic plan will hurt its finances.

Several companies warned on the crisis, which is compounding a hit from higher commodity and energy prices due to the Russia-Ukraine conflict.

A.G. Barr raised prices of its products in February and will continue to monitor its costs through the year, White said.

The drinks maker expects inflationary pressure to continue through the year and affect consumer purchasing behaviour.

The company, however, still expects a rise in full-year profit as it controls costs and sales grow.

The company increased its interim dividend by 25% and reported an adjusted profit before tax of 25.3 million pounds ($27.36 million) for the 26 weeks ended July 31, compared with 20.6 million pounds a year earlier.

Its shares were down 1% at 492.5p by 1024 GMT in London.

($1 = 0.9246 pounds)

Reporting by Sinchita Mitra in Bengaluru; Editing by Saumyadeb Chakrabarty and Rashmi Aich

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