CANADA: Seagram charge hurts Corby Distilleries profits

Corby Distilleries, the Canada-based subsidiary of Pernod Ricard, has reported a sharp fall in half-year profits due to an impairment charge on its Seagram Coolers brand.

Net profits for the six months to the end of December slid to CAD9.56m (US$9m), compared to CAD17.87m in the same period of the previous year, Corby Distilleries said late yesterday (10 February).

Profits were damaged by a one-off impairment charge of CAD11.5m relating to a fall in value of the firm's Seagram Coolers brand.

"Over the past two years, the brand underperformed relative to its competitive set due to aggressive competition from both category leaders as well as new entrants in adjacent categories," said Corby.

The group said that it has "revised its long-term outlook to reflect changes in expectations for the brand".

Problems with Seagram Coolers masked a mild recovery in sales for Corby in its fiscal second quarter.

Net sales for the half-year still fell, to CAD88m from CAD93.8m last year, but earnings from operations rose by 24% in the second quarter, said the group, which handles Pernod's brands in Canada.

"Notwithstanding the non-cash impairment charge related to the Seagram Coolers business, I am pleased with Corby's second quarter results from an operational and commercial perspective, particularly in light of adverse market conditions," said Patrick O'Driscoll, president and CEO of Corby.

"After a difficult first quarter which was being compared against a relatively high base in the comparative period, we have seen improved volume trends over the past few months," he said.

Corby said that it remains committed to Seagram Coolers.

"Management remains committed to the Seagram Coolers brand and is pursuing several strategic avenues with the aim of maximising the potential of this valuable asset," the company said.

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