By Ian McConnell

Business Editor

SCOTCH whisky distiller Edrington has hailed a “better-than-expected” performance in its last financial year, noting its operating environment had included Brexit, US tariffs, and coronavirus pandemic effects.

While noting the financial results showed a “material decline in revenue and profit”, after “several years of consistent growth”, Edrington described the figures as “encouraging”.

It also announced it had agreed to take a significant minority stake in the “ultra-premium” No.3 London Dry Gin, which is owned by Berry Bros. & Rudd, a private, family business. Edrington noted it has had “a long and successful partnership” with BB&R, dating back nearly 100 years.

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Glasgow-based Edrington, which produces The Macallan, Highland Park and The Famous Grouse, yesterday reported a 21 per cent fall in pre-tax profits to £178.4 million for the year to March 31.

The group reported core revenue from Edrington-branded products at constant currency of £576.2m, down 15% from the prior financial year.

Edrington chief executive Scott McCroskie said he was “encouraged” by sales growth in the first quarter of the new financial year.

Detailing trading in the last financial year, the group said: “Edrington’s leading brand, The Macallan, saw a significant decline in contribution driven by a sharp contraction in global travel retail, closures of bars and restaurants and wholesaler destocking in the USA. However, consumer demand…remained strong and the business pivoted to accelerate progress in new channels such as ecommerce.”

It added that The Macallan had seen “strong performances” in China, south-east Asia and Russia.

Edrington declared it had been a “challenging year” for its other single malts, Highland Park and The Glenrothes, “reflecting a competitive category, loss of sales in travel retail and the impact of tariffs in the USA”.

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It noted The Famous Grouse had “proved resilient” in its core markets in northern and eastern Europe and “extended its lead as Scotland and the UK’s favourite whisky”.

Edrington added that its Brugal premium rum “generated outstanding growth in its home market of the Dominican Republic”.

Edrington’s principal shareholder is The Robertson Trust, which has donated £301 million to charitable causes in Scotland since 1961.

Mr McCroskie said: “In last year’s annual report, I anticipated a decline in profitability after several years of consistent growth as a result of the coronavirus pandemic and tariffs on single malt Scotch whisky in the USA, our largest market. Our reported results confirm that this was indeed the case, although I believe that the relatively modest declines represent a good outcome in the circumstances.”

Edrington’s brand investment was £118.9m in the year to March, down 8% from the prior year. This represented 21% of core revenue, up from 19% in the prior year.

Mr McCroskie said: “The reduction in net sales reflects pandemic-related restrictions as well as trade destocking primarily in the USA. Our decision to maintain relatively high levels of brand investment meant that core contribution reduced by more than net sales, although that was mitigated by a range of cost reduction measures. Our free cash flow and net debt both improved as a result of these measures, and I am pleased that the company remained well within its lending limits and banking covenant tests.”

Mr McCroskie added: “I am proud of the way our people have responded to the pandemic, and of the results we have achieved. The fundamentals of our business are strong, and our brands are in good health.

“Although the pandemic will continue to impact our business for some time to come, I am encouraged by the growth in sales we have seen in the first quarter of this financial year. I am confident we can navigate the challenges we face and that we are ready to progress from a position of strength.”