The Macallan maker reports £7m fall in profits

Spirits producer Edrington, which owns whisky brands The Macallan and The Famous Grouse, has reported a fall in profits of £7 million in its end of year financial results.

Ian Curle with portfolio 520 px_1

Ian Curle, chief executive of Edrington.

Releasing results for the year ended 31 March 2016 yesterday, the group reported revenues of £574.6m, which was in line with the previous year, however its profits fell to £72.7m – a £7m drop on the previous year. Pre-tax profits fell by 13.2% to £146.4m in the year to 31 March.

The producer attributed this drop to the “adverse impact of both currency and intense competitor activity in Taiwan and the UK” and “continued political and economic volatility” making for difficult trading conditions.

In terms of its brands, The Macallan achieved overall growth in both volume and value, despite “intense competitive activity” in Taiwan denting its volumes. The brand performed particularly strongly in China, Russia and the US, where it is now the number one brand by value in the single malt category.

Highland Park continued to show good momentum across its major markets in Europe, the USA and Canada, delivering increased value.

Volumes of The Famous Grouse were reduced in the face of “intense competitive pressure”, however the brand achieved growth in both Spain and the USA.

Brugal rum returned to profit growth in its core markets of the Dominican Republic and Spain after the company announced a £239m writedown for the brand last year after facing “tough economic and competitive conditions”.

Snow Leopard vodka showed positive volume growth during the year, with activity focused on key cities in Asia and the USA. Cutty Sark saw volume decline relative to the prior year, however the brand grew ahead of its category in Spain, Portugal and the USA.

A ‘year of transition’

A year ago, Edrington set out its 2020 strategy which included plans to develop super premium brands, “perfect The Macallan” and “accelerate Highland Park”.

“A year on from the launch of Edrington’s new strategy, we see evidence that we have put the right strategy into effect, and that it is delivering results”, said Ian Curle, chief executive of Edrington.

“During this year of transition we have faced challenging economic and trading conditions with strong performances in key markets and shortfalls in others. In combination witht he influence of currency, this has adversely affected our results. Recent investment in distribution is showing benefits with the USA, Global Travel Retail and South East Asia delivering double figure growth.

“Edrington will continue to invest in its brands and in growing markets for premium spirits. Our new distillery and brand home for The Macallan is taking shape in Speyside, and we look forward to welcoming visitors in spring 2018.”

The company’s total equity currently stands at £604.7m, compared with £515.7m in 2015. Earlier this year, Edrington became the sole shareholder in its Edrington Fix Middle East (EFME) unit after buying out joint venture partner FIX Wines & Spirits.

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