Edrington profits drop by £7m in full-year results

The Macallan and The Famous Grouse Scotch whisky producer Edrington saw its profits fall by £7 million in 2015/16 due to “tough trading conditions”.

Ian Curle highlighted “challenging economic conditions” in Edrington’s latest full-year results

While revenues in the year ending 31 March 2016 remained flat at £574.6m, profits tumbled from £79.7m to £72.7m.

The firm was affected by political and economic volatility, difficult trading environments in the UK and Taiwan, and adverse currency fluctuations in the emerging markets, which it anticipates will continue to impact performance in 2016/17.

The Macallan suffered depleted volumes and market share in its key Taiwanese market due to “intense competitive activity”, however the brand performed “particularly strongly” in China, Russia and the US, where it is now the number one single malt Scotch whisky by value.

Blended Scotch The Famous Grouse witnessed reduced volumes in the UK – its largest market – following increased competition, but grew sales in the US and Spain.

Highland Park grew value across Europe, the US and Canada at the same time as Cutty Sark was hit by softness in the blended Scotch whisky category, with overall volumes declining. Edrington said it remains “confident” for the brand’s future and has lined up brand extensions for the year ahead.

After experiencing two consecutive value write downs due to “extreme difficulties” in key markets, Brugal rum returned to profit growth in its core markets of the Dominican Republic and Spain thanks to an effective premiumisation strategy.

Rounding off Edrington’s core portfolio, Snow Leopard Vodka’s volumes were boosted by activity focused in Asia and the US.

New strategy

Ian Curle, chief executive of Edrington, said the group’s new strategy, unveiled last year, is now “delivering results”.

“During this year of transition we have faced challenging economic and trading conditions with strong performances in key markets and shortfalls in others,” he said. “In combination with the 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.”

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. The firm also announced plans to close its Perth office to open a new HQ in central Glasgow – a move that could lead to a number of job losses.