REG - Distil PLC - Trading Update

DistilAnnouncement

11/04/2024 07:00

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RNS Number : 1122K  Distil PLC  11 April 2024

Distil PLC

Trading Update

 

Distil plc (AIM: DIS), owner of premium drinks brands RedLeg Spiced Rum,
Blackwoods Gin and Vodka, TRØVE Botanical Vodka and Blavod Black Vodka,
provides an update on trading for the fourth quarter of its financial year
ended 31 March 2024.

 

Unaudited year-on-year Q4 (January - March) 2024 key results:

 

·    Q4 volumes decreased 47% year-on-year

o  Full year cumulative volumes increased 8%

·    Q4 revenues decreased 23% year-on-year to £344k (Q4 FY2023 £448k)

o  Full year cumulative revenues increased 17% to £1.55m (FY2023 £1.32m)

·    Q4 gross profit decreased 19% to £205k (Q4 FY2023 £252k)

o  Full year cumulative gross profit increased 11% to £759k (FY2023 £683k)

·    Q4 advertising and promotional spend increased 78% to £130k (Q4
FY2023 £73k)

o  Increase for the quarter relates to in-market activation with export
customers, new product development, and investment into activity which is
expected to yield positive results in the current financial year

o  Full year cumulative A&P spend decreased 15% to £496k (FY2023 £582k)

·    Cash reserves of £526k at 31 March 2024

·    Partnership agreed with Global Brands to service UK off-trade
customers

·    Progress at Blackwoods Distillery and Visitor Experience at Ardgowan
gathers pace

 

Don Goulding, Executive Chairman of Distil, said:

 

"The Company has faced a tough quarter of trading as the wider market
continues to operate within challenging conditions, however the full year
results remain positive, showing double-digit growth on the previous year.

 

Market Conditions

Across the total spirits trade, volumes declined as consumers, facing
continued spending pressures, are cutting back on consumption or turning to
categories that are perceived to be less expensive, such as beer and cider.
Whilst the headline rate of inflation fell, prices within the UK are still
increasing, particularly within spirits which, following the duty increase
implemented in August 2023, is twice the headline rate. In tandem with this,
the on-trade continues to contract, with around 16,000 outlet closures in the
UK since March 2020 as venues come up against reduced staff availability,
mounting utilities bills, cost of credit, and changing consumer habits.

 

UK Performance

 

Q4 is historically our quietest trading period, particularly in the UK. Our Q4
sales came in below the previous year as major customers changed ordering
patterns, particularly in relation to online sales. We experienced high Q3
sales into some customers which has resulted in a higher than usual stock
holding at those customers, and therefore lower sales out from Distil this
quarter. In addition, a temporary reduction in distribution in one key
customer has impacted this quarter's results, however we are working closely
with our new partner Global Brands to restore this to the usual level as soon
as possible, and do not expect this to be an ongoing issue.

 

Export Performance

Despite economic challenges being faced globally, in Export markets we have
grown our business 131% year-on-year for the quarter, with full year tracking
at +26% year-on-year. This figure includes increased interest in Blackwoods
Gin & Vodka, but has been primarily driven by encouraging results of
in-country marketing activity for RedLeg. We will continue to build upon this
and roll market-specific activity out to additional regions in the coming
financial year.

 

Strategic Partnerships

Q4 also saw the inking of our new partnership with Global Brands to service
our UK grocery, cash & carry, and convenience customers. Building on a
strong existing relationship with the Global Brands team, this partnership
will see us tap into its extensive sales network, and proprietary logistics
and warehouse capabilities. The partnership offers the opportunity to work
closely with a longstanding partner to accelerate brand growth. Commercial
decisions and marketing activity will remain driven by Distil internally.

 

We are confident in Global Brands' capabilities and position in the trade,
with positive steps having already been made. We look forward to growing our
business with them in the current financial year.

 

Our relationship with Marussia Beverages in the UK remains in place. The team
has delivered encouraging results at a difficult time for the on-trade and we
are working closely with them to ensure we are well positioned to build
through this new financial year.

 

Progress at Ardgowan

Despite challenging winter weather conditions, works on the building at the
Ardgowan Distillery which will house the Blackwoods experience have
accelerated through Q4 and we are pleased to report that building works are
complete and Distil has now taken control of the building to implement
fit-out.

 

The first distillation is planned for the coming weeks, and we have new
product in the pipeline to celebrate this milestone. We look forward to
sharing more information with shareholders in the near future.

 

Full Year Results & Outlook

Despite a slower Q4 than expected, and the medium-term outlook for the spirits
market remaining challenging, we are encouraged by the double-digit full-year
growth following the restructuring of the business over the past year. The
team has been working diligently to set us up in a strong position to continue
to build on this growth in the coming months, and I look forward to sharing
updates on their efforts next quarter and beyond.

 

Market guidance for FY24/25 will be issued at the time of our final results
announcement in June."

 

For further information:

 

 Distil PLC
 Don Goulding, Executive Chairman            Tel +44 203 405 0475
 SPARK Advisory Partners Limited (NOMAD)
 Neil Baldwin                                Tel +44 20 3368 3550

 Mark Brady
 Turner Pope Investments (TPI) Ltd (Broker)
 Andy Thacker / James Pope                   Tel +44 20 3657 0050

 

About Distil

Distil Plc is quoted on the AIM market of the London Stock Exchange. It owns
drinks brands in a number of sectors of the alcoholic drinks market. These
include premium spiced rum, vodka, gin, vodka vanilla cream liqueur and are
called RedLeg Spiced Rum. Blackwoods Vintage Gin, Blackwoods Vodka, TRØVE
Botanical Vodkas, Blavod Original Black Vodka and Diva Vodka.

 

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