By Cinchita Mitra
(Reuters) – British orange drink maker Iron Bro on Tuesday reported a hit to profit margins in the second half of the year as it struggles with rising costs and consumers cutting back on spending.
AG Barr imports raw materials such as mangoes and aluminium, but chief executive Roger White has ignored any direct or short-term impact from a weaker pound that has shaken up British markets.
“We’ll just see how the pound performs,” White told Reuters. “We are hedged in the short and immediate term but we are replacing those hedges on an ongoing basis. We will just have to shift with the market.”
Sterling fell to an all-time low against the dollar on Monday as investors worried that Britain’s new economic plan would hurt its finances.
Many companies warned of the crisis, which was exacerbated by the rise in commodity and energy prices due to the conflict between Russia and Ukraine.
White said AG Bar raised the prices of its products in February and will continue to monitor its costs during the year.
The beverage maker expects inflationary pressure to continue during the year and influence consumer buying behavior.
However, the company still expects higher full-year earnings as it controls costs and sales growth.
The company increased its interim dividend by 25% and announced an adjusted profit before tax of 25.3 million pounds ($27.36 million) for the 26 week ended July 31, compared to 20.6 million pounds in the previous year.
Its shares were down 1% at 492.5 pence by 1024 GMT in London.
(dollar = 0.9246 pounds)