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LONDON (Alliance News) - London-based drinks company Distil PLC saw almost a third of its market capitalisation wiped away Monday after the company said that a delay in securing regulatory approval for two distributors for its brands in the US, means it will now "significantly" miss current market expectations.
The profit warning caused Distil shares to fall 32% Monday morning to 0.700 pence, the second-worst performing stock on London's AIM market.
Distil said in July, that it had agreed terms with two US distributors for its brands Blavod Vodka, Blackwoods Gin and Blackwoods Vodka. However the company since has been waiting for approval from the US Alcohol and Tobacco Tax and Trade Bureau.
"We have no control over the speed of this application process and to date have not received approval, nor a clear indication of when it may be forthcoming. We do not foresee any refusal however we were planning to have these permissions in time to have shipments in market and distribution established prior to the peak trading period," the company said in a statement Monday.
The US is a key market for the company, and Distil said that because of the delay it will now not meet its sales forecast for this year, and it has also been unable to achieve the monthly break-even, which it had expected to have achieved by now.
"We therefore anticipate that, notwithstanding we are only nearly half way through the financial year, the full year results will be significantly below current market expectations," the company said.
Distil Chairman Don Goulding told Alliance News in July that it has had to delay plans to launch a new product aimed at the Latin American market until early next year, while it focused on securing distributors for its brands in the US.
In its statement Monday, Distil said that while approval has been delayed for its Blackwoods brand, its RedLeg spiced rum is progressing a little further.
"RedLeg natural flavouring has now been approved by the US Food and Drug Administration and that the necessary approvals for it to be sold in the US are now being sought from the TTB [US Alcohol and Tobacco Tax and Trade Bureau]," the company said.
Distil said that outside of the US, where the majority of its trading currently takes place, sales volumes have continued to grow, with Blackwoods Gin up 22% year-on-year and RedLeg Rum up 48%.
"We remain entirely focused on building our brands and broadening our distribution base which is critical in this market and have recently appointed distributors for RedLeg in Russia and Canada and for Blackwoods in Portugal Germany, France and Italy as per our planned expansion," the company said.
Distil said it will release its interim results in early November.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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