By Ian McConnell

Business Editor

DISTILLER Edrington yesterday reported a strong rebound in core revenues and profits for the year to March, to well ahead of pre-pandemic levels, declaring The Macallan single malt had “led the business performance”.

The Glasgow-based company, which employs nearly 1,000 people in Scotland and has a global workforce of more than 3,000, experienced sharp falls in revenues and profits in 2020/21 amid the coronavirus pandemic.

Edrington’s core revenues in the year to March 31, 2022, from sales of its continuing branded products on a constant-currency basis, were up by 45 per cent on the prior 12 months at £821.2 million. This is 22% higher than in the year to March 2020, a period which Edrington describes as “pre-pandemic”.

Core contribution, which is profits on a constant-currency basis from branded sales and distribution after deduction of overheads, jumped by 53% to £295.6m in the year to March. This is up by 28% on the 2019/20 financial year.

Edrington’s principal shareholder is The Robertson Trust, which has donated £322m to charitable causes in Scotland since 1961. In the latest year, £21m was donated to Scottish charities.

The distiller said the “accelerated development” of direct-to-consumer sales of The Macallan was a significant driver of growth, particularly in Asia.

It added that its malt whiskies business unit, comprising The Glenrothes, Highland Park and Naked Malt, had performed well across key markets, “growing the value of sales ahead of the increase in volume”.

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Edrington noted that its Brugal premium rum “continued to generate outstanding growth in its home market of the Dominican Republic and good performance in Spain, its leading international market”.

Scott McCroskie, chief executive of Edrington, said: “Edrington has returned to the consistent growth trend we saw in the years before the pandemic, with robust performances across our core markets, particularly the USA, China and the Dominican Republic.”

Earnings before interest and tax, before exceptional items, were at £291.6m in the year to March up by 54% on the prior 12 months. Pre-tax profits, before exceptionals, increased to £270.7m from £171.3m in the prior financial year, having been £222.4m in 2019/20.

Retained profits, excluding exceptional items, rose by 18% to £91.8m. Edrington noted that, excluding the effect of additional deferred tax charges of £26.6m (after the deduction of minority interests) resulting from a change in the UK corporation tax rate, growth in retained profits would have been 53%.

Mr McCroskie said: “Our growth this year comes in the context of a recovery in the global premium spirits market, although our portfolio has been able to outperform the market by a significant margin, benefitting from an early return to investment in our people, brands and capabilities.”

He added: “We have returned to the growth trend we saw in the years before the pandemic, with net sales increasing across all business units…The growth in the value of sales outstripped the growth in volume, reflecting the success of our strategy to focus the business on the most premium products, along with positive market and channel mix.”

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Brand investment by Edrington, defined as marketing expenditure on core brands on a constant-currency basis, was at £170.7m in the year to March up by 46% on the prior 12 months and 34% higher than in the 2019/20 financial year.

Mr McCroskie noted that Edrington had suspended shipments to Russia in response to the invasion of Ukraine.

He said: “In response to the invasion of Ukraine, we suspended shipments to Russia and continue to monitor the situation carefully. Our thoughts are with all those displaced and suffering because of this crisis. We are committed to supporting international humanitarian charities through our Giving More Together initiative, double-matching funds raised by our employees worldwide.”

Mr McCroskie highlighted the likely impact on sales in China of efforts there to suppress Covid-19.

He also noted challenges arising from inflationary pressures and supply-chain disruption.

However, he expressed confidence that Edrington would achieve further success.

Mr McCroskie said: “These excellent results show Edrington and our brands 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 throughout the new financial 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 achieved in the past year. Edrington is a strong and very special business, 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 record high. Sales of our brands increased by 45% on the previous year, and core contribution by 53%. To put this performance into context, when the pandemic struck in early 2020, we expected that it would take us until 2022/23 to get back to our previous trend line. For Edrington to have bounced back in two years and delivered all-time record results this year is excellent.”

He expressed cautious optimism about the future, while noting the challenges ahead.

Mr Gillies said: “In the year ahead, we will not have to look far to see continuing difficult headwinds. Not only do we face the uncertain consequences from the war in Ukraine, but we continue to face shutdowns in China.

“In addition, economic conditions in most parts of the globe have become more challenging. Slowing growth, commodity and energy-driven inflation, and potentially taxation increases may all impact on the company either directly or indirectly on our consumers.”

He added: “Challenging as the external environment is, the resilience and adaptability demonstrated in recent years stands us in good stead. Furthermore, many of the underlying drivers of our growth such as the growing middle classes around the globe and the continuing consumer trend to seek out spirits with quality and provenance have not gone away. We remain cautiously optimistic.”