Whisky curator, The Artisanal Spirits Company, has cut its pre-tax loss against a decline in some markets, particularly China.

The owner of The Scotch Malt Whisky Society (SMWS) , Single Cask Nation & J.G. Thomson posted a half-year EBITDA improvement of £1m against relatively flat revenue delivery.

This resulted in a reduction in the loss before tax to £3.1m in the six months to the end of June from £3.5m last year.  SMWS membership grew 4% to 40,300 (H1 2023; 38,700).

Andrew Dane, CEO, told Daily Business that the company would not be expected to report a bottom line profit until 2027.

In its statement with the results, it said trading conditions and consumer purchasing behaviour experienced in the last financial year have continued in FY24, an impact felt by most businesses within the spirits industry over the last 12-18 months.

The board of the AIM-quoted company said that following significant investment in the cask inventory, it now holds all spirit required to meet demand through to the next decade.

As a result, the cash profile of the group is improving, and net debt has peaked, as it transitions from material net cash investments in stock to a replenishment approach.

H2 initiatives include further international expansion, two new Scotch Malt Whisky distillery releases and the refresh of the range to ensure it continues to reflect current consumer trends, resulting in new releases.

Trading to date in H2 has seen the company consolidate the improved profitability in H1, which alongside the expected H2 revenue delivery from core markets at similar levels to FY23, planned US shipments and continued cask sales, ensure it remains on track to meet FY consensus EBITDA. 

Mr Dane, CEO, said in his statement: “We have delivered a creditable performance and made good progress on our journey towards profitability despite challenging trading conditions prevailing in some markets.  We continue to focus on attracting and retaining higher quality members, whilst maintaining a well-controlled cost base. 

“Our proven strategy of investing in whisky stock has built an impressive inventory to satisfy our requirements well into the next decade, as well as delivering a significant uplift in value creation, with the current cask value of just over £100m.  Correspondingly, the Group now only needs to acquire stock on a replenishment basis, thereby significantly improving the future cash profile of the business.

“Single Cask Nation has integrated well and is performing to expectation.  Our revenue streams and the geographies in which we operate are becoming increasingly diverse, further limiting our exposure to any given market.  This together with the actions we’re taking now are building this unique business for the longer term to the benefit of all shareholders. 

“We enter H2 with a clear strategy, a focus on delivery of the key drivers of profitability in the year across cask sales and US shipments and remain confident of meeting FY24 EBITDA expectations.”