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Underlying performance strong

Famous Grouse owner says volatility hits profits

Ian CurleDrinks group Edrington, owner of some of the most famous spirits brands, blamed “political and economic volatility” for a slip in annual profits.

Underlying performance, stripping out currency changes, remained strong, said the Glasgow-based company which owns The Famous Grouse, The Macallan, Cutty Sark and Highland Park whiskies. 

EBIT (earnings before interest, tax, excluding effects of currency and trade sales) for the year to the end of May came in at a standstill £155.9m ((2015: £154.5m).

The company said this indicates strong performance from the company’s premium malt whisky brands and a return to growth for Brugal, its rum brand, in its core markets of Dominican Republic and Spain.

Eliminating the effect of a reduction in unbranded sales and currency fluctuations resulted in underlying EBIT growth of £1.4m (0.9%), which the company feels properly reflects the performance of the core business.

Profits for the year were £72.7m, down £7m on the prior year, reflecting the adverse impact of both currency and intense competitor activity in Taiwan and the UK.

There is a proposed final dividend per share of 26.3p, making 38.1p for the full year. 

In a statement, the company said it faced “a challenging environment in 2015-16 and results were impacted by continued political and economic volatility, tough trading conditions in the mature markets of the UK and Taiwan, and the influence of currency exchange rates in emerging markets.

It added: “Uncertain political, economic, and trading conditions are likely to endure through 2016-17.”

During the year Edrington purchased the remaining shareholding in Edrington Fix to strengthen the company’s distribution in the fast growing markets of the Middle East, the Gulf, and North Africa. 

Ian Curle (pictured), chief executive, said: “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.

“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 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.”

 

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