BURN Stewart, the
long-troubled whisky distiller, claimed yesterday to be on the road to recovery after a switch of emphasis away from
own-label bottling to the promotion of its own brands.
The company, based in East Kilbride, has been in the red for three years and remains crippled by debt.
But over the past year it has dumped the least profitable parts of its own-label business and boosted sales of its flagship brand Scottish Leader in niche export markets.
Exports were helped by economic recovery in Taiwan, a change of distributor in South Africa and an oil-fed boom in Venezuela.
Turnover increased 4% to #31m in the 12 months to June 30 and Burn Stewart notched up a #245,000 operating profit after a #3m loss previously.
But it remained crippled by a #39.7m debt which guzzled #4m in interest payments. These pushed Burn Stewart into #3.8m loss at the pre-tax level, although that was a marked improvement on the #7.1m loss incurred previously.
Managing director Ian Bankier held out the prospect of a return to profitability this year, but Jamie Cumming, a whisky analyst with stockbroker Bell Lawrie White in Glasgow, was doubtful.
''I will be surprised if they make a loss of less than a million quid this year,'' he said.
''Life is still very tough for them.''
Bankier said Burn Stewart had scrapped loss-making sales of nearly 200,000 cases of ''cheapest on the shelf'' whisky and gin to supermarkets last year.
However, sales of more expensive own-label brands to the likes of Asda, Waitrose and Marks & Spencer still accounted for half its business in volume terms.
The Scottish Leader brand, which offers much better profit margins, increased sales by nearly 10% to around 300,000 cases, he noted.
Bankier now plans to boost the marketing spend behind Scottish Leader and the Tobermory single malt, taking advantage of a recent restructuring of Burn Stewart's large debt to Bank of Scotland.
This was converted into a 10-year term loan of #20m and an overdraft facility of #23.5m, an arrangement which gives the company a 10-year breathing space before it starts to repay capital.
Burn Stewart shares, which were floated at 140p in 1991, edged 0.5p lower to 18.5p last night, leaving the company capitalised at just #12m.
But with Trinidad's CL Financial group owning 28.3% and the directors a further 23.9%, there is little demand for the paper.
CL Financial, which owns various drinks interests in Florida and the Caribbean, bought its stake in Burn Stewart last year at 45p a share with the board's approval.
One insider said yesterday that a full takeover by CL Financial was simply ''a marriage waiting to happen''.
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