Edrington Results

Edrington racks up profits rise; Increased marketing spend boosts four main brands for whisky group

By Kristy Dorsey, Deputy Business Editor The Herald (Glasgow) July 3, 2003

WHISKY group Edrington has announced another year of record profits, helped by increased marketing of its main brands and lower interest payments on its debts.

Excluding its 25% stake in Maxxium, the sales and distribution network, Edrington's turnover rose 15% to (pounds) 230.7m during the

12 months to March 31. Profits before tax jumped by an even higher margin of nearly 25%, to (pounds) 61.7m.

Ian Good, chairman and chief executive of Edrington, said all of the privately -owned distiller's four main brands had recorded growth in their main markets. This includes Famous Grouse, Cutty Sark and the Macallan and Highland Park single malts. "It's the highest amount (of marketing spend) we've ever put behind the brands, and the brands have responded well," said Good, who refused to say how much had been spent on advertising and marketing. However, he added that these budgets would increase again in the current financial year.

Despite the upbeat figures, Good was subdued on future prospects. Noting that there was still a great deal of global economic uncertainty, as well as the lingering aftermath of Sars in Asia and the war in Iraq, he said Edrington was "generally cautious" as it headed into the new financial year.

"The trading environment across the world is uncertain at present, and the competition is strong," he said. "In such circumstances it is difficult to make confident predictions of future prospects."

The results included a full year's contribution from Langs, Glengoyne, Black Bottle and Bunnahabhain, the four brands that Edrington sold in two separate deals in the weeks after the close of the financial year.

The sale of these brands and their associated distilleries is thought to have brought in nearly (pounds) 20m for Edrington, with this cash helping to fund higher marketing expenditure during the coming 12 months. Good said the loss of sales from these brands, which were sold as part of a programme to focus efforts on Edrington's main products, would not have a large impact on turnover and profits in the current year: "It's not going to transform the figures you're seeing today."

In addition to higher sales across the main product portfolio, Edrington also benefited from lower interest rates. This cut (pounds)

4.5m off the expense of servicing its debts, which fell 6% to (pounds) 263.6m.

Sales of Macallan, the single malt produced in Speyside, posted double-digit growth in its main US market last year.

Good said this was a particularly credible performance in the face of the US economic downturn, as consumers tend to switch out of premium products like Macallan into lower-priced goods when times are tough.

Famous Grouse, Edrington's top-selling blended brand, put in a good performance in the UK, Greece and Sweden. About 70% of all Famous Grouse made is exported, with the remainder sold in the UK.

Cutty Sark did particularly well in Portugal, Good said, while Highland Park progressed from a relatively low base in its main markets in the UK, Germany and the duty free sector. Increased efficiencies at Edrington's bottling facility in Glasgow - brought about by the installation of a new (pounds) 3m high-speed bottling line - also helped overall performance.

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