DOUGLAS Laing & Company, the independent bottler and blender of Scotch whisky, has increased its sales and gross profit but has warned that "rough weather" lies ahead as economic conditions deteriorate in the UK and elsewhere in Europe.

The Glasgow-based company was founded in 1948 by Fred Douglas Laing, and it has remained in Laing family control ever since. Today the business is run by brothers Fred and Stewart Laing. The company specialises in the single cask and small batch single malt/grain Scotch whiskies.

In accounts for the year ended on March 31, 2010 made available to The Herald, the company lifted turnover to £5 million, up from £4.4m for the previous period, and increased gross profit to £2.5m from £2.2m. The company said both figures were ahead of projections.

Laing more than quadrupled operating profit to £1.3m and pushed up pre-tax profit to £1.23m from £282,000 – a five-fold rise.

“There was a significant improvement once again in the company’s underlying trading profitability – largely due to significant strong growth in sales of its key malts and the success of new blended malt,” said Fred Laing, one of the two managing directors of the firm.

He said the company had anticipated growing annual turnover by 5% to around £4.7 million but a strong performance brought total sales up to £5 million.

“There was a corresponding £0.268 million rise in gross profit to £2.5m. Gross margin remained unchanged at 50% – reflecting continued strong growth in the company’s high-value malts. The reported pre-tax profit of £1.23m is an increase of £948,000 on last year, whilst the company’s underlying profitability rose by £200,000 – an increase of 25% – to £1m.”

Mr Laing said the company seeks out “markets that are hot” and pointed to France, Switzerland and Germany in Europe, and Singapore, Vietnam and Malaysia in Asia.

“France has been strong for us during the past two years ... and Germany is a relatively new market for us. We have a good distributor in (the northern city of) Bremen,” he told The Herald.

“France is one of the biggest markets for Scotch whisky in the world along with the United States. The BRIC (Brazil, Russia, India and China) countries have done nothing for Douglas Laing,” he declared. “We have been in and out of Russia ... and doing business in India is difficult.

He also said the group has had difficulties breaking into the huge Chinese market, where there is a growing middle class eager to buy western goods.

“We have not taken off in China,” he said.

“We may not have had the right people acting for the company in Hong Kong (where Laing’s agents are based),” he said.

In the UK, Laing’s sales are “static”, but the managing director said that is “rather good”, given the widespread consumer squeeze that is gripping the British economy.

He said the group likes to work with small shops in the UK rather than big chains, and its products are available online. London department stores Harrod’s, Fortnum & Mason and Selfridges, as well as premium independent whisky specialists like the Whisky Shop Group and Vintage House, all sell Laing’s whiskies.

Looking to the rest of 2011, Mr Laing said he saw “rough weather ahead” as the economic picture in Europe and elsewhere darkens. He said there has been some slippage in France and Germany but the Asian operations continue to hold up well.

Good steady growth has come from the company’s flagship brand, the Old Malt Cask, which carries single-barrel bottlings of malts ranging in age from 10 to 40 years.

“We have started off ahead of last year and are ahead of budget because our markets have been percolating,” he added. “Vietnam and Malaysia are getting stronger.”

He also said Laing airfreights malt whiskies to a group of buyers in Japan and has a good market on the Chinese island of Taiwan, where sales have increased by 85%.

“The directors are sanguine enough to acknowledge just now that some of their traditional markets may be hard hit with financial problems. Accordingly, new lower-priced products such as the Director’s Cut, the Epicurean Blend and a new range of 20cl single cask flasks are being introduced.”

New whiskies are also being sold in the US market, Scandinavia, Switzerland, France, Italy, the Netherlands and New Zealand.

No dividends were paid during the year, reflecting the directors’ desire to strengthen the company’s balance sheet.