A challenging first half
Distil delivered a breakeven result at the interim stage despite challenging trading conditions, particularly in the UK unflavoured gin market. The previous stock overhang, driven by the supply chain ahead of the previous end-March Brexit date and which also contributed to the H1 sales performance, has now been cleared. Distil has also secured the Mardi Gras trademark in Europe and the USA, which will drive further NPD (new product development) initiatives. The core spiced rum market continues to see growth and new RedLeg brand extension launches should underpin a more robust sales performance in the second half. Combined with continued cost management discipline, Distil expects FY20E operating profit to remain in line with previous forecasts. We have revised our outer year forecasts however to remain prudent in light of ongoing market headwinds.