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
[HUG#1379024]
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