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Blavod Wines & Spirits plc (DIS)

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Monday 01 February, 2010

Blavod Wines & Spirits plc

Trading Update






Blavod Wines & Spirits PLC (the 'Company')

1 February 2010

Trading Update

The  Company announces that  its third quarter  sales (to December 31 2009) were
well below expectations, and that as a result full-year profits will be hurt.

After  strong reported growth  in the first  half, sales slowed  abruptly in the
last weeks of the year, and sales volume grew by only 1% in the October-December
quarter  compared to 2008/9. Our analysis of retail off-take shows that this was
due essentially to higher retail prices on several key products which lost share
to  heavily-promoted  competitors.  Also,  and  as  reported  at the time of the
interim  results, the Company continued to be  very prudent in its credit policy
and this constrained sales in the UK and Export. (the Company was not exposed to
the recent First Quench failure).

Whilst  volumes were well short of  expectations, our investment spending behind
the  brands and on  overheads, particularly the  newly-strengthened sales force,
continued as planned at a significantly higher level than last year.

The  Board  expects  a  better  fourth  quarter; however given the importance of
Christmas  and New Year this will not  be sufficient to regain the momentum lost
over  that period.  In addition,  the Company  has suffered  exchange losses and
one-off  costs not  originally forecast.  As a  result, profits will be severely
affected  and our current expectation for  the full year ending 31 March 2010 is
for  the Company to report profits at  around the break-even level, as against a
reported profit of £185,000 in 2008/9.

Financing

Pressure  on the Company's working capital has lessened as a result of the lower
rate  of growth  in Q3,  and the  Board believes  that the Company has access to
sufficient funds for its operations for the foreseeable future

Outlook

Whilst  this setback is very disappointing, the  Board believes that it is short
term,  and is confident of achieving a meaningful profit in 2010/2011. There are
major  causes  for  optimism;  Blavod  will  regain  UK  distribution,  and  new
initiatives are in hand to support the Blavod brand. Moderately increased prices
have  been  agreed  on  several  brands  which  will  improve  margins and allow
further Advertising  and  Promotion  support,  and  a number of new products are
planned  to be introduced  in the Spring.  Furthermore now that  the Company has
deepened  its infrastructure to be capable of  operating a higher level, it will
not increase its overheads.


Colin Campbell
Non Executive Chairman

For further information, please contact:

Blavod Wines & Spirits plc

Richard Ambler (Managing Director)
0207 352 2096

Brewin Dolphin Investment Banking (Nominated Adviser)
Neil Baldwin/Adam Rudd
0845 213 4726


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