DISTILLER Edrington yesterday reported a strong rebound in core revenue and profit for the year ending March, well above pre-pandemic levels, saying single malt Macallan had “led performance commercial”.
The Glasgow-based company, which employs nearly 1,000 people in Scotland and has more than 3,000 staff worldwide, has seen a sharp drop in revenue and profit in 2020/21 amid the coronavirus pandemic .
Edrington’s base revenue in the year to March 31, 2022, from sales of its continuing branded products on a constant currency basis, increased 45% from the prior 12 months to 821, £2 million. That’s 22% more than in the year to March 2020, a period Edrington describes as “pre-pandemic.”
Core contribution, which is the brand’s constant-currency profit from sales and distribution net of overheads, jumped 53% to £295.6m in March. This is an increase of 28% compared to the 2019/20 financial year.
Edrington’s largest shareholder is The Robertson Trust, which has donated £322m to charitable causes in Scotland since 1961. Over the past year, £21m has been donated to Scottish charities .
The distiller said the “accelerated development” of direct-to-consumer sales of The Macallan was an important driver of growth, particularly in Asia.
He added that his malt whiskey business unit, comprising The Glenrothes, Highland Park and Naked Malt, had performed well in key markets, “increasing value in sales before increasing volume”.
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Edrington noted that its premium Brugal rum “continued to deliver exceptional growth in its home market of the Dominican Republic and strong performance in Spain, its number one international market.”
Scott McCroskie, Managing Director of Edrington, said: “Edrington returned to the consistent growth trend we saw in the years before the pandemic, with strong performance in our core markets, particularly the United States, China and in the Dominican Republic.
Profit before interest and tax, before exceptional items, was £291.6m in the year to March, up 54% on the previous 12 months. Pre-tax profit, before exceptional items, rose to £270.7m from £171.3m the previous year, having been £222.4m in 2019/20.
Retained earnings, excluding exceptional items, increased by 18% to £91.8m. Edrington noted that, excluding the effect of additional deferred tax charges of £26.6 million (after deduction of minority interests) resulting from a change in the UK corporation tax rate, the growth retained earnings would have been 53%.
Mr McCroskie said: “Our growth this year comes against the backdrop of a recovery in the global premium spirits market, although our portfolio was able to outperform the market by a significant margin, benefiting from rapid return on investment in our people, brands and capabilities.
He added, “We have returned to the growth trend we saw in the years leading up to the pandemic, with increased net sales across all business units…Sales value growth exceeded growth in volume, reflecting the success of our concentration strategy. activity on the most high-end products, as well as a positive mix of markets and channels.
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Edrington’s brand investment, defined as marketing spend on core brands at constant currency, was £170.7 million in the year to March, up from 46% compared to the previous 12 months and 34% compared to the 2019/20 financial year.
Mr McCroskie noted that Edrington suspended shipments to Russia in response to the invasion of Ukraine.
He said: “In response to the invasion of Ukraine, we have suspended shipments to Russia and continue to monitor the situation carefully. Our thoughts are with all those displaced and suffering due to this crisis. We are committed to supporting international humanitarian charities through our Giving More Together initiative, which doubles the funds raised by our employees worldwide.
Mr McCroskie pointed to the likely impact on sales in China of efforts to suppress Covid-19.
He also noted challenges arising from inflationary pressures and supply chain disruption.
However, he said he was confident that Edrington would achieve further success.
Mr. McCroskie said: “These excellent results show that Edrington and our brands are recovering well from the effects of the pandemic in markets around the world despite the volatile trading environment. We expect consumer price inflation, input cost pressures and supply chain disruption to continue through the new fiscal year, and Covid-19 remains a threat.
“In the short term, efforts to suppress the virus are likely to affect our sales in China, and the risk of a more dangerous variant emerging anywhere in the world remains. However, we have healthy brands, an effective strategy, record levels of investment in the business, great people and strong momentum. I am proud of what we have accomplished over the past year. Edrington is a strong and very special company, and I am confident that our company is well positioned to deliver further success in the future.
Commenting on the results for the year to March, Edrington Chairman Crawford Gillies said: “Results for the year are at an all time high. Sales of our brands increased by 45% compared to the previous year, and the basic contribution by 53%. To put this performance in context, when the pandemic hit in early 2020, we expected it would take us until 2022/23 to get back to our previous trend line. The fact that Edrington has rebounded in two years and achieved an all-time record result this year is great.
He expressed cautious optimism about the future, while noting the challenges ahead.
Mr Gillies said: “Over the coming year, we won’t have to look far to see persistent difficult headwinds. Not only do we face the uncertain consequences of the war in Ukraine, but we continue to face blockages in China.
“In addition, economic conditions in most parts of the world have become more difficult. Slowing growth, commodity and energy inflation, and potentially tax increases, can all impact the business either directly or indirectly on our consumers.
He added: “As challenging as the external environment is, the resilience and adaptability demonstrated over the past few years stands us in good stead. In addition, many of the underlying drivers of our growth, such as the growth of the middle classes around the world and the continued trend of consumers seeking quality and provenance spirits, have not gone away. We remain cautiously optimistic.
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