EDRINGTON Group has hailed strong performance of its core whisky brands but a near £239 million impairment charge on Brugal rum pushed the company into an annual loss.
Turnover was down more than two per cent from £633.1m to £617.7m in the 12 months to March 31 this year partly as a result of lower revenue from Brugal as well as foreign exchange fluctuations.
Underlying pre-tax profits came in at £157.6m, down from £174m.
After adding in a pension related credit the business booked exceptional charges of more than £210m, sending it to a loss of £52.7m.
Edrington upped its marketing spending in the year while also continuing to invest in a new Macallan distillery, additional warehousing and a major IT project to bring all its operations into one system.
The Glasgow company highlighted encouraging growth at its four core Scotch whisky brands.
The Macallan increased its overall turnover by 10.5 per cent helped by its performance in the United States and Asia. The single malt is now said to be the market leader in its category in Russia, China, Japan, South Korea and Hong Kong.
Highland Park saw its net turnover rise more than 20 per cent on the back of volumes increasing by around 15 per cent, primarily as a result of expansion in the US.
Famous Grouse maintained its position as the top blended Scotch whisky in the UK and also made in-roads into new markets such as Turkey and Nigeria.
Cutty Sark saw volume and turnover rise in the year with Edrington suggesting the brand had outperformed the market in Spain. The Prohibition Cutty Sark edition was said to have gained a foothold in the US while Indian distribution is growing.
Chief executive Ian Curle said: "Our whisky portfolio performed ahead of the market and this shows the strength of our brands."
The Snow Leopard vodka also saw volume growth across the US, Asia and travel retail categories while Brugal was down in its core markets of Spain and the Dominican Republic.
Edrington said: "The forecasted growth expectation for the Brugal brand has been revised downwards. This has resulted in an impairment of the Brugal intangible brand asset amounting to £239m."
In its 2013 financial year Edrington took a £275 million impairment on Brugal.
A spokesman said Brugal's performance was more encouraging in the second part of the most recent financial year and its premium versions had grown sales by 50 per cent.
The spokesman said Edrington has seen "spectacular" results after taking its distribution in-house across a number of key markets including the US, where it now employs 150 people directly, and south east Asia.
While acknowledging the impact of Chinese austerity cuts Edrington said Asian performance as a whole was flat but the long-term potential in the region remains very promising.
The Edrington annual report states the highest paid director received a total package worth £1.3m, down from £1.5m as a result of lower bonus payments.
That director received emoluments including pension of £494,000, benefits worth £165,000, annual bonus of £260,000, a long-term bonus of £344,000 and employee share scheme contributions of £20,000.
The document also outlines Edrington's strategy to put more focus on premium spirits over the next five years as that is predicted to be the fastest growing category.
Mr Curle said: "Edrington considers that it has brand assets that are well positioned to benefit from continuing trends towards premium spirits. The company believes that the medium and longer term macro-economic factors of growing population, increasing numbers of emerging middle class consumers internationally and polarisation in value, with a growth in high net worth individuals will be beneficial to its business.
"However, it is evident that the market for mainstream blended Scotch and rum will continue to be competitive in the coming years."
Edrington owner The Robertson Trust made £18.2m of awards to 742 projects in the financial year. In April Edrington bought the 50 per cent share in the Maxxium Travel retail business it did not own from Maxxium UK. The company is now rebranded as Edrington European Travel Retail and will focus on the fast growing duty free shopping market.
The global duty free market is predicted to grow rapidly by 2020 boosted by a near doubling of Chinese international travellers to around 200 million people.
Edrington also entered into a £120m of long-term private debt placements and refinanced its one-year facility to increase it to £80m.
The spokesman said the new financial year has started off "positively" but there remains a number of targets to be hit.
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