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Macallan owner's profits up 10% but suspends dividend

Pre-tax profits were up 10% last year for Edrington as the Macallan owner continued to refocus on premium brands.

The Glasgow-based group which also makes Highland Park and The Glenrothes reported earnings before interest, tax, depreciation and amortisation (EBITDA) at £222.4 million for the year to 31 March, 2020.

That was despite the early impact of coronavirus from bars and restaurants closing in the Far East and the impact on airport sales from travel restrictions.

In its annual financial results, Edrington reported core revenue was up 6% at £699.6 million, outstripping the 3% increase in volume sold due to the shift from blends such as Famous Grouse to single malts and the premium rum Brugal.

But chief executive Scott McCroskie warned the future is uncertain as the drinks industry emerges from the coronavirus crisis. In its annual financial report today, Edrington said it would be suspending its dividend this year.

McCroskie said: “Edrington had a highly successful year in 2019/20. A 6% year on year increase in core revenue and a 13% rise in core contribution marks four consecutive years of profit growth and validates the consistent long-term investment in our brands and our focus on strengthening critical business capabilities.

“However, it is important that we recognise that these results largely reflect a pre-coronavirus world. While our business is on a sound financial footing, we do not underestimate the challenges we will continue to face as we navigate the crisis and emerge into an uncertain new environment.”

The drinks industry has been impacted by the enforced closure of bars and restaurants since the spread of coronavirus across the world. Edrington said revenues for the last financial year had been affected by shutdowns in February and March in the Far East.

McCroskie added: “We anticipate a significant decline in global sales and profits in 2020/21. Our immediate response has been to minimise cash outflow and control costs. We will continue to manage the business prudently whilst we adapt rapidly to our new situation and seek to capitalise on emerging opportunities.

“I believe the business is well-equipped to respond to changes in both consumer preferences and the channels through which spirits are sold. Fundamentally, our capabilities are strong, and our brands are in good health and remain desirable to consumers.

“Edrington’s success is powered by great people and exceptional brands. I am proud of the results the business achieved last year, and I am confident that we will navigate through this crisis and emerge fit for future growth.”

Published in Insider -