Glasgow-based drinks company Edrington — owner of Scotch whisky brands The Macallan, Highland Park and The Famous Grouse — said on Wednesday its core revenue fell 15% to £576.2 million in the year to March 31, 2021.
Profit before tax fell 21% to £178.4 million.
The company said the results “reflect a better-than-expected performance in an operating environment that included Brexit, US tariffs and the effects of the global pandemic.”
Edrington announced in January an agreement with Suntory Holdings under which Suntory will buy 10% of Edrington shares for an undisclosed sum.
Edrington said in January the investment by the Japanese beverage giant would provide “an inflow of funds” to Edrington’s principal shareholder The Robertson Trust “which will allow it to give more to good causes across Scotland” and will also “provide funds for Edrington’s employee share scheme.”
On Wednesday, Edrington said its brand investment was £118.9 million during the year, down 8% on prior year growth, and net debt was £375.5 million, an improvement of £76.3 million on the prior year.
“Edrington’s leading brand The Macallan saw a significant decline in contribution driven by a sharp contraction in global travel retail, closures of bars and restaurants and wholesaler destocking in the USA,” said the company.
“However, consumer demand for the world’s most valuable Single Malt Scotch Whisky remained strong and the business pivoted to accelerate progress in new channels such as e-commerce.
“The brand saw strong performances in China, South-East Asia and Russia …
“It was a challenging year for our other single malts, Highland Park and The Glenrothes, reflecting a competitive category, loss of sales in travel retail and the impact of tariffs in the USA …
“The Famous Grouse proved resilient in its core markets in northern and eastern Europe and extended its lead as Scotland and the UK’s favourite whisky.”
Edrington CEO Scott McCroskie said: “In last year’s annual report, I anticipated a decline in profitability after several years of consistent growth, as a result of the Coronavirus pandemic and tariffs on Single Malt Scotch Whisky in the USA, our largest market.
“Our reported results confirm that this was indeed the case, although I believe that the relatively modest declines represent a good outcome in the circumstances.
“The reduction in net sales reflects pandemic-related restrictions as well as trade destocking primarily in the USA.
“Our decision to maintain relatively high levels of brand investment meant that core contribution reduced by more than net sales, although that was mitigated by a range of cost reduction measures.
“Our free cash flow and net debt both improved as a result of these measures, and I am pleased that the company remained well within its lending limits and banking covenant tests.
“I am proud of the way our people have responded to the pandemic, and of the results we have achieved.
“The fundamentals of our business are strong, and our brands are in good health.
“Although the pandemic will continue to impact our business for some time to come, I am encouraged by the growth in sales we have seen in the first quarter of this financial year.
“I am confident we can navigate the challenges we face and that we are ready to progress from a position of strength.”