SHARES in the company which owns The Scotch Malt Whisky Society plunged more than 20% this morning after it issued a profits warning, stating that it had “identified two areas that are expected to challenge the current year result”.

The Artisanal Spirits Company said a “weaker performance” in China in the fourth quarter, following a record performance in September that led to double-digit percentage growth in quarter three, meant it would not fully meet expectations of revenue growth of 25% on the second half.

It also reported a slower than anticipated rate of sales on its new 50th anniversary member cask sales programme, which launched at the end of November.

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Artisanal, which said members of the SMWS had surpassed 40,000 in this its 40th anniversary year, said it now expects to break even in its current financial year.

Despite the recent setbacks, the company “remains confident that it can continue to grow profitably with FY24 anticipated to deliver revenue and adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) similar to that which was previously expected in 2023, with the phasing of growth therefore deferred by a year”.

It said it was continuing to trade well in other areas and that its “stock-backed balance sheet is strong”. This has been boosted by a new partnership with finance provider Ferovinum, which Artisanal said has allowed it to convert maturing stocks into a “just-in-time asset at a truer valuation without increasing its overall debt level, giving the group financial flexibility and optionality”.

Chief executive Andrew Dane said: "Our business continues to develop and grow strongly with successful strategic initiatives and membership growth driving profitable sales.

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“Whilst it is disappointing that our Q4 sales in China and the sales rate of the brand-new cask programme have not yet met anticipated levels, the remainder of the business has performed well and grown in line with expectations, and we are on track to deliver substantial EBITDA growth in H2-23.

“Our model is robust, throughout FY23 we have ensured that we have the right cost base for the business, we are well-financed, and we remain confident of future profitable growth."

Shares were trading at 45.5p, down 12p or 20.87%, at 10.07am.