Famous Grouse maker Edrington yesterday revealed that the benefits of soaring demand for Scotch in emerging markets were nearly wiped out by falling sales in Greece, Portugal and Spain as the eurozone debt crisis squeezed consumer spending.
Group turnover for the year to 31 March edged up by just 0.5 per cent to £556.1 million, compared with an 18 per cent leap in the previous 12 months as austerity took hold in Europe.
Troubles in the eurozone also took their toll on the annual bonus for chief executive Ian Curle, which fell to £270,000 from £416,000 a year before.
But Curle’s overall pay packet rose to £1.34m from £1.23m thanks to a rise in his bonus from the firm’s long-term incentive plan, which is based on the past three-years’ performance.
Sales of the company’s Cutty Sark blend fell in southern Europe, while weakness in the Spanish economy also held back growth for Famous Grouse and the firm’s rum label, Brugal.
Yet growth in higher-margin markets such as Asia, Russia and the United States drove a 5.2 per cent rise in underlying pre-tax profits to £148.8m. Profits had risen by 24 per cent in the previous 12 months thanks to the sale of the Glenrothes single malt brand to wine importer Berry Brothers & Rudd for £14.6m.
Profits from the Macallan single malt grew by 40 per cent, outstripping the market, while special editions of Highland Park helped the Orkney-based brand to grow its profitability.
Curle said: “We have grown earnings, reduced our debt and strengthened our strategic position with brand growth in emerging markets and the addition of distribution companies in China and Hong Kong.
“In recent years Edrington has increased its international reach and this year we have taken further important steps to harmonise and develop our business interests. Following the acquisition of the distribution companies in China and Hong Kong, and the rapid expansion of our New York office, all our overseas companies are now trading under the Edrington name.”
Curle said he planned to invest in whisky production in Scotland and rum output from the Dominican Republic to keep up with demand from emerging markets, along with sales and marketing investments in Africa, Asia and the Middle East.
Although the company remained tight-lipped on the details of its plans, it is understood that it will make multi-million pound investments over the next five years, with the Macallan brand expected to be the main beneficiary. Larger rivals Diageo and Pernod Ricard have also unveiled investment plans in recent weeks.
The rising surplus also helped Edrington to raise its total dividend by 11.1 per cent to 30p a share, triggering pay-outs of £19.8m, primarily to the Robertson Trust, the charity that owns the distiller.
The trust – set up 50 years ago by Agnes, Babs and Elspeth, the granddaughters of group founder William Robertson – supports Scottish charities and made 746 donations worth a total of £14.7m in 2011-12, up from 559 payments worth £11.4m in the previous 12 months.