THE trading company which runs the Glenmorangie whisky business has cited “soft demand” in Asia as profits dipped by nearly 30 per cent in its most recent financial year.
Macdonald & Muir, which is the trading entity of The Glenmorangie Company, made a profit before tax of £14.2 million for the year ended December 31, accounts newly filed at Companies House show. It follows a profit of £19.8m in 2016.
The accounts show the Edinburgh-based firm, whose lead brands are Highland whisky Glenmorangie and Islay malt Ardbeg, turned over £79.9m for the period, down from £84.3m.
Directors at the distiller, which is ultimately owned by the French luxury goods business LVMH (Louis Vuitton Moet Hennessy), said the fall in profits was “primarily driven by a soft demand in Asia, where the focus in 2017 was to lower the level of stocks in the distribution”.
Writing in the accounts, directors state: “Macdonald & Muir Limited limited the level of shipments to Asia in 2017, to optimise the level of stocks already contained within the distribution system. Excluding this, both Glenmorangie and Ardbeg, delivered increased volume and profit growth.
“The company remains confident in its objective to build strong premium single malt whisky brands.”
The accounts come after luxury spirits makers, including distillers Diageo and Pernod Ricard, have reported in recent months signs of recovery in China, where sales came under severe pressure from 2012 after government-led austerity measures hit the corporate gift giving market.
Reporting its first-half results in July, LVMH said revenue from wine and spirits came in at €2.27 billion for the period, down marginally on the €2.29bn reported for the first half of 2017. LVMH said period had seen the Chinese market continue to develop rapidly for flagship Cognac brand Hennessy, which also saw rapid growth in the US.
“Glenmorangie and Ardbeg whiskies started off the year with strong growth,” LVMH declared last month. “An ambitious expansion plan is under way for the distilleries of the companies.”
Glenmorangie announced in January plans to expand the capacity of its Highland Distillery by adding two more of its trademark tall stills, in response to growing global demand for single malt Scotch whisky.
The project, which coincides with its 175th anniversary, involves the construction of a second stillhouse at Tain, supplementing the six stills already operational.
The Macdonald & Muir accounts show the value of stocks held by the firm stood at £174.5m at December 31, compared with £157.7m a year earlier.
According to the accounts, the company employed an average of 207 staff in 2017, down from 208, while payroll costs edged up to £14.4m from £13.9m. Directors’ remuneration climbed to £1.4m from £1.03m, as the emoluments of the highest-paid director increased to £583,000 from £565,000.
Writing in the accounts, the directors outline their vision to drive further volume and profit from Glenmorangie and Ardbeg in “fast-growing, international markets where there is significant opportunity for premium whiskies.”
“The company’s absolute focus is on brand development and increasing market share. Over the coming years, we intend to further upweight our investment in marketing support for our brands and take further advantage of the well-established global distribution network of the company’s parent company,” the directors said.
“We are very encouraged by the results achieved to date from our strategy and we believe the benefits of this long-term investment is already bearing fruit.”
The accounts were filed after The Glenmorangie Company unveiled Thomas Moradpour as its new chief executive in June, succeeding Marc Hoellinger.
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