TIDMDIS
RNS Number : 4581M
Distil PLC
12 January 2023
12 January 2023
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 third
quarter of its current financial year ending 31 March 2023.
-- Year-on-year third quarter (October to December 2022)
unaudited revenues decreased 48% to GBP411k (October to December
2021: GBP789k)
-- Decrease in revenue primarily due to:
o One-off reduction in UK market stock cover associated with
removal of UK distributor as previously forecast
o Significant one-off reduction in stock availability during key
Christmas trading period within a major retailer
-- RedLeg Spiced Rum delivered a strong performance across other
major retailers during the quarter
-- Blackwoods performance adversely impacted by delist in medium-sized retailer
-- Marussia (UK distributor) has taken control of on-trade and
is making positive progress increasing distribution
-- New export markets opened in Scandinavia, and Latin America
-- Option to invest additional GBP2m in Ardgowan not taken up at
this time in order to focus cash resources on core business
-- Ardgowan Distillery Project
o External renovation of gin building complete with internal
renovations ongoing
o Site construction underway following revised plans for a more
ambitious whisky distillery
-- Full-year revenue will be significantly below market
expectations, with the Company expected to make a full year EBITDA
loss of cGBP0.6m in line with previous market guidance
-- Cash reserves at period end of GBP277k, net of receivables and payables GBP840k
Don Goulding, Executive Chairman of Distil, said:
"The business faced several challenges in Q3 leading to
disappointing year-on-year performance versus the previous year.
These are one-off issues affecting this financial year and will not
continue into FY23.
As announced in our interim results in October, at the end of H1
we progressed our move away from our previous UK distributor and
commenced the implementation of a new business model, taking direct
control of major customers. This move was completed in October, and
in Q3 we were still seeing the associated impact of the significant
reduction in UK market stock cover, which in turn has reduced
revenue in this fiscal year as forecast when the move was
announced.
The third quarter, and December in particular, is the key
trading period for our business, however, the wider UK spirits
market was softer than anticipated during the quarter, with overall
UK spirits sales down in response to a challenging economic
environment.
It is important to be able to maximise sales throughout this key
trading period but, regretfully, a system issue within one of our
major customers resulted in reduced stock cover. RedLeg was
performing well with a strong rate of sale, however the system
issue meant that stock was not being replenished quickly enough,
resulting in erratic promotional activity and out of stock issues
at store level. Our team has been working hard with the customer
over the quarter to resolve the issue and have together found a
solution, with normality expected to return from Q4.
Our other major retail customers performed well across the
quarter, with sales at a consumer level showing on average +38% YOY
growth in December.
I am disappointed to report that despite positive brand growth,
a mid-sized retailer took the decision in Q3 to reduce its gin
range in response to the overall decline in the gin market, which
included delisting Blackwoods 40% Gin from its stores. This news
will have a significant impact on the brand; however, this gives us
the opportunity to re-examine the brand positioning in the current
market and focus efforts on rebuilding the brand in its home
territory of Scotland with on-trade and regional off-trade
listings.
The effect of these issues is that the Company's turnover for
the current year will be materially beneath market expectations;
the Board's expectation is that adjusted EBITDA loss for the
current year will be around GBP0.6m, in line with previous market
guidance.
To mitigate the effects of the issues faced on the full year
results, our focus for Q4 is firmly on driving growth, with
promotional activity and additional marketing support in place to
help recover volumes where possible.
In the UK on-trade, new partner Marussia has been making
encouraging progress in driving distribution and we will begin to
see the fruits of these efforts in Q4 and beyond into the next
financial year.
Expansion of our brand footprint in export markets has made
positive progress, with new markets opened in Scandinavia and Latin
America in Q3. Export growth remains a key objective for Q4,
including increased marketing support in key territories to support
accelerated brand growth.
We took the decision in Q3 not to exercise the option (which
expired at the end of December 2022) to invest a further GBP2m into
the Ardgowan Distillery project at this time to focus cash
resources on our core business. The Ardgowan plans remain intact,
however revised plans for a larger, more ambitious carbon negative
whisky distillery naturally led to a resubmission of plans which
have now been approved. External renovation of the gin building is
complete with internal works ongoing. Bespoke distillation
equipment is due to be installed and commissioned over the coming
months. The project still represents a significant long-term
investment for our business, and we continue to support the team's
vision.
We remain cautious as the market faces challenges around
inflation, and consumer confidence is impacted. Our brands are in
strong positions to withstand market turbulence, and we are
confident in our plans moving forward to the end of this financial
year and beyond. However, given the challenges experienced in Q3
and the prevailing headwinds in our chosen markets, we expect full
year revenue to be below, and operating losses in line with,
current market forecasts. We will provide longer-term market
guidance reflecting our new operational model at the time of
publishing our full year financial results.
For further information please contact:
Distil plc
Don Goulding Executive Tel: +44 203 283 4007
Chairman
Shaun Claydon, Finance
Director
----------------------
SPARK Advisory Partners
Limited (NOMAD)
----------------------
Neil Baldwin Tel +44 203 368 3550
Mark Brady
----------------------
Turner Pope Investments
(TPI) Limited (Broker)
----------------------
Andy Thacker / James Tel +44 20 3657 0050
Pope
----------------------
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About Distil
Distil Plc is quoted on the AIM market of the London Stock
Exchange. It owns drinks brands in a number of sectors in the
alcoholic drinks market. These include premium spiced rum, vodka,
gin, lower ABV spirit drinks and are called RedLeg Spiced Rum,
Blackwoods Vintage Gin, Blackwoods Vodka, Blavod Original Black
Vodka, TRØVE and Diva Vodka.
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