Premium spirits group Distil has fallen to a loss as revenues returned to more normal levels following a lockdown surge.
Turnover fell 19% to £2.9m in the 12 months ended 31 March, but Distil highlighted an “unprecedented” one-off surge in sales in the prior year as consumers stocked up while at home.
Sales remained 20% ahead of pre-pandemic levels at the company, which owns the RedLeg spiced rum, Blackwoods gin and vodka, and Blavod Black vodka brands.
Margins remained broadly flat at 55.4% but the group sank to a pre-tax loss of £95k, compared with profits of £243m in the previous year.
Distil highlighted expenses associated with its £3m investment in the development of a new malt whisky distillery in Scotland as contributing to the loss.
It also flagged “substantial” cost price increases being proposed by its suppliers during the year.
Distil said price inflation would play a key role in the new financial year in determining cost of goods and consumer spending habits as disposable income were squeezed.
It added it would “strongly resist” increases and work to find “creative” cost efficiencies and to leverage scale.
The company was optimistic its brands remained “reassuringly positioned as an affordable premium product”.
Executive chairman Don Goulding said: “Distil brands continued to perform well in a volatile market recovering post-Covid.
“The reopening and return of consumer confidence in the hospitality sector has contributed to growth in-line with our forecasts pre-pandemic.
“Continued challenges to costs have accelerated the consolidation of our production, which has allowed us to benefit from greater efficiencies and economies of scale.
“In addition, we are building our sales and marketing departments internally to allow us to react quickly to market challenges, increase our distribution footprint and drive marketing reach.”
The FTSE 100 suffered a hangover this morning from the inflation shock hitting US markets on Friday after the London exchange closed for the weekend. The blue-chip index opened down 1.2% to 7,232.87pts.
Food tech stocks were hit hard this morning, with Just Eat Takeaway down 7.4% to 1,706.8p, Deliveroo down 6.8% to 92.8p and Delivery Hero down 4% to €36.41.
THG also fell 3.6% to 119.6p as markets opened, while SSP Group was down 3.5% to 235.4p, AG Barr fell 1.3% to 516p and B&M European Value Retail was down 2.4% to 351.3p, with most fmcg stocks in the red.
There were few risers first thing, with Devro up 1% to 194.9p, Kerry Group up 0.4% to €92.44 and Reckitt Benckiser up 0.4% to 6,068p.
This week in the City
It’s looking quiet once again in terms of scheduled market news for the fmcg grocery sector.
WH Smith is set to issue a third-quarter trading update on Wednesday, while Tesco reveals first quarter figures ahead of its AGM on Friday.
In the wider economy, the Bank of England will announce its latest interest rates decision on Thursday, with the Monetary Policy Committee expected to hike rates to highest level in 13 years.