Perthshire-headquartered Highland Spring Group has seen operating profit drop by about a quarter in 2017, although its revenues were up by a tenth and it said it remains optimistic for the bottled water market.
The business, which since 2008 has been led by chief executive Les Montgomery, said revenues for the year to 31 December exceeded £110 million, a year-on-year jump of 10 per cent.
Mark Steven, group finance director at Highland Spring Group, commented: “One of the core strategic principles for the group is development of the Highland Spring brand.
“We are proud to have regained the number one branded position in the UK market, being the first UK bottled water brand to exceed annual sales of 300 million litres. Highland Spring’s share of the UK bottled water market is 17.5 per cent.”
But he also flagged that the firm’s operating profit for 2017 was £4.2 million, a year-on-year fall of 24.7 per cent that was mainly attributed to “significant” increases in raw material costs that were absorbed by the business, particularly on polyethylene terephthalate. Known as PET, it forms Highland Spring water bottles, with the firm saying it is the best plastic material available.
Steven continued by saying that the business, which was set up by the Dubai-based Al Tajir family in 1979 and remains under its ownership, is “confident” that there continues to be a strong market for natural source waters, “based on our market insight and the continued demand for healthy products”.
He added: “We will look to mitigate the short-term impact of cost increases through improved production efficiencies and re-engineering our product range to encourage light weighting of materials.
“We invested in excess of £20m in increasing bottling capacity in 2016 and 2017 to meet current and anticipated market demand, which enabled the installation of two new production lines at our Blackford facility. This includes the fastest, most technologically advanced PET bottled drinks line in the UK.”
The group also said it “remains focused on meeting the needs of a truly circular plastics economy and we are committed to doing business in an environmentally sustainable way”.
It has trialled the Highland Spring eco bottle, made from 100 per cent recycled PET to help cut ocean pollution, and supported an “ambitious” new report from the Cambridge Institute for Sustainability Leadership, which sets out a roadmap to eliminate plastic packaging waste in the drinks sector by 2030.
Steven also stated: “We continue to have confidence in the UK bottled water market, which has grown for the ninth consecutive year with annual growth of 8.1 per cent in 2017.”
Highland Spring recently lost a battle over plans to demolish an 18th century hotel in Blackford, Perthshire, and convert surrounding buildings for offices and facilities,
Its plans for the multi-million-pound new headquarters were stymied after Historic Environment Scotland awarding protected C-list status to the Blackford Hotel site.