IAN Macleod distillers is eyeing expansion after growing annual profits by around a third helped by booming demand for Scotch whisky in overseas markets.

The West-Lothian based company made £33.7 million profit after tax in the latest financial year, compared with £25.4m in the preceding period.

The success is revealed in the latest accounts for the group covering the year to September 30, during which turnover increased by 21% annually, to £160m, from £132m.

The group’s brands include Glengoyne, Smokehead and Tamdhu single malts and the King Robert blend.

Recent growth in sales appears to have been driven by the group’s success in the export business.

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Total sales to European Union countries rose by 39.9%, to £19.9m, in the year to September 30. Rest of the world sales increased by 34% to £79.3m.

By contrast UK sales were relatively flat, totalling £60.4m against £58.9m last time.

Directors indicated that the privately-owned group has made more rapid progress on the sales front in the UK in the gin market. The group’s operations include the Edinburgh Gin business, for which it is building a new distillery.

In the strategic report in the accounts, directors noted: “Over recent years the group has benefited from the strong worldwide demand for packaged and bulk single malt whisky and the recent strength of the UK gin market.”

A range of whisky producers have highlighted the strength of overseas demand in recent months.

In February the Scotch Whisky Association revealed that the value of Scotch exports topped £6 billion for the first time in 2022. The value of exports rose by 37% to £6.2bn during the year, with the Asia-Pacific region overtaking the EU as the industry’s largest regional market.

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Industry champions have sounded the alarm about the potential impact of tax hikes included in the March Budget, rising energy costs and Scottish Government proposals to curb advertising, which were shelved by Humza Yousaf after he succeeded Nicola Sturgeon as first minister.

Directors of Ian Macleod Distillers noted that the group has been impacted by increases in energy charges. Its borrowing costs have risen amid the series of interest rate increases imposed by the Bank of England in support of its efforts to tackle the surge in inflation in the UK.

However, the directors noted that the group has made good progress despite facing a range of challenges in recent years.

“The group is exposed to the effects of major and profound economic, epidemiological, political, technological or societal changes which are beyond its control. Recent examples include the Covid-19 pandemic, Brexit and cost inflation across many relevant input costs,” wrote directors.

They added: “Recent trading performance during periods of uncertainty is sound, this leads to confidence that steady and consistent future progress is achievable.”

The group is pursuing expansion on several fronts.

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It is working on a plan to restart production at the historic Rosebank distillery at Falkirk, which was closed in 1993. Ian Macleod Distillers acquired the site in 2017.

“The construction of Rosebank Distillery continued throughout the year with the completion date being deferred due to a range of supply chain and programme issues. Once complete, the Board looks forward to opening a site of quality and significance,” wrote directors.

They added: “Distilling is expected to start early in the summer with the visitor centre opening towards the end of the year.”

The group has been selling stocks of Rosebank whisky distilled before 1993, which it acquired from Diageo. This developed out of United Distillers, which used to operate Rosebank.

Ian Macleod Distillers is working on plans to develop a distillery on Islay and to open a new blending and maturation complex near Stirling.

In the accounts directors noted that the group has a profitably subsidiary in India, which supplies whisky to local drinks firms. The subsidiary is building a malt distillery.

The accounts note that director Leonard Russell has a majority shareholding in Ian Macleod Distillers.

The group paid £3m total dividends in the latest financial year, and £1m in the preceding period.