Edrington to increase investment in Macallan
Published by Anne Marie Hughes on Wed 04 Jul 12 @ 10:35
By Simon Bain, Business Correspondent/Personal Finance Editor, The Herald.
Spirits giant Edrington is planning a multimillion-pound investment in Scotland over the next five years after racking up 57% profits growth and 25% debt reduction since 2008.
The spend is likely to focus on star brand The Macallan, with new stills and warehousing on Speyside to anticipate future demand, as well as investment in its operations in Glasgow which support 450 jobs.
The group yesterday underlined the strength of Scotland's hottest export by notching up a 5.2% rise in profits, on the back of a continuing sales shift to more profitable brands and markets.
The Macallan outpaced the malt whisky market, growing profit by 40% on booming sales in its key US and Asian markets. A company spokesman said: "The big strain is the ability to meet demand, and we are super-confident about the prospects for Macallan."
The group's underlying pre-tax profit rose to £148.8 million on turnover up only 0.5% at £553.4m, as growth in Asia, Russia and the US outweighed depressed sales in the troubled southern eurozone.
Edrington, which employs 750 in Scotland and more than 1500 overseas, also slashed debt by more than £52m to £463m, on top of a £113m reduction over the previous two years.
The Robertson Trust, owner of the company and a formidable obstacle to unwelcome takeover approaches, is rewarded with a dividend rise of 11.1% to 30p. The trust gave £14.7m to charity last year, a rise of more than £3m from 2010.
Ian Curle, Edrington's chief executive and the new chairman of the Scotch Whisky Association, said: "The company is in a position to harness this potential through investment in our people, brands, route to market, and maturing inventory."
The strategic focus on the US and Asia would be complemented by increased investment in south-east Asia, Russia, emerging Europe, the Middle East, and sub-Saharan Africa.
"In order to support this growth further significant investment is planned at our operational sites in Scotland and the Dominican Republic," Mr Curle said.
Famous Grouse strengthened its position as market leader in Scotland last year, but overall growth was "modest", held back by "more challenging economic and competitive conditions in mature European markets".
Brugal, the rum market leader in Spain and the Dominican Republic, lost volume as both economies struggled, but increased its share in Spain, while Cutty Sark was also hit by its concentration of sales in Greece, Spain and Portugal, and is re-focusing on emerging markets. Orkney's Highland Park, however, grew volumes in the UK, US and Nordic countries, and accelerated profitability due to "price management and special editions".
The group simplified its branding and "Edrington" identity worldwide during the year. It acquired distribution companies in China and Hong Kong and signed new agreements for eastern Europe and sub-Saharan Africa, while adding 31 staff to its new Americas office in New York.
Chairman Sir Ian Good writes in the annual report: "While debate rages about the best way to stimulate economic recovery, Scotch whisky steadfastly contributes £134 per second to UK plc."
He goes on: "Unfortunately there are still many international instances of protective trade barriers preventing fair competition and favouring local spirits."
Remuneration of the highest-paid director, assumed to be Mr Curle, was down 13% at £846,000, though his long-term incentive plan benefits rose from £259,000 to £494,000.