Artisanal Spirits shares sink on trading update

Artisanal Spirits CEO Andrew Dane

Shares of Edinburgh-based Artisanal Spirits Company plc (ASC), owner of The Scotch Malt Whisky Society (SMWS), fell more than 10% after it published an “update on trading and strategic initiatives” that said it has “identified two areas that are expected to challenge the current year result.”

The company said: “Our full year revenue is now expected to be around £23 million (plus or minus 1%).

“This would represent mid to high single digit full year revenue growth, with an acceleration in revenue growth in H2-23, from the 3% delivered in H1-23, albeit below the current consensus revenue forecast of £25 million. 

“Firstly, the expected strong uplift in revenue growth of 25% during H2-23 v H2-22 may not be fully met due to weaker performance in China in Q4-23 against strong double-digit growth in Q3-23 which included a record performance in September.

“Secondly, the group has experienced a slower than anticipated rate of sales on the brand-new 50thanniversary member cask sales programme launched at the end of November; whilst generating a positive contribution this year, sales will not be at the anticipated level by the 31 December 2023 year end.

“Whilst sales and EBITDA have continued to grow year on year with strong EBITDA growth in H2-23, group adjusted EBITDA for H2-23 is likely to be nearer to £2 million and therefore the group will record a result of around breakeven at an adjusted EBITDA level for FY23.

Looking forward, the group remains confident that it can continue to grow profitably with FY24 anticipated to deliver revenue and adjusted EBITDA similar to that which was previously expected in 2023, with the phasing of growth therefore deferred by a year. 

“Despite the two specific challenges listed above, other areas of the group continue to trade well and further progress on strategic objectives has been made as detailed below.

“The group’s stock-backed balance sheet is strong, even more so since recently agreeing its partnership with Ferovinum which has allowed ASC to convert maturing stock into a just-in-time asset at a truer valuation without increasing its overall debt level, giving the group financial flexibility and optionality.

“Under the current arrangement ASC can draw up to a further £12.4 million providing ample cash and liquidity.”

Artisanal joined the London Stock Exchange’s junior AIM market in June, 2021, with its shares priced at 112p, giving it a stock market value of £77.96 million.

However, the shares are currently trading around 50p, giving it a current stock market value of around £35 million.

Artisanal Spirits Company CEO Andrew Dane said: “Our business continues to develop and grow strongly with successful strategic initiatives and membership growth driving profitable sales.

“Whilst it is disappointing that our Q4 sales in China and the sales rate of the brand-new cask programme have not yet met anticipated levels, the remainder of the business has performed well and grown in line with expectations and we are on track to deliver substantial EBITDA growth in H2-23.  

“Our model is robust, throughout FY23 we have ensured that we have the right cost base for the business, we are well financed and we remain confident of future profitable growth.”