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Corby Distilleries reports 11% decline in Q4 profits on increased advertising costs

Published: 09:59 27 Aug 2010 AEST

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Spirit manufacturer and marketer Corby Distilleries (TSX:CDL.A, TSX:CDL.B) has posted an 11% decrease in its fourth quarter profits, from $7.4 million last year to $6.6 million on account of increased advertising and promotional expenditures invested in the company`s key brands, it said.

For the fourth quarter, sales edged up slightly higher to $38.2 million from $36.9 million, as did operating revenue for the quarter, which increased by $0.6 million, from $41.4 million last year to $42 million in Q4 2010.

Corby's, a Canadian manufacturer and marketer of spirits and importer of wines, has a portfolio of owned-brands, including Wiser's Canadian whiskies, Lamb's rum, Polar Ice vodka and McGuinness liqueurs. Through its affiliation with Pernod Ricard, Corby also represents brands such as ABSOLUT vodka, Chivas Regal, The Glenlivet and Ballantine's scotches, and Jameson Irish whiskey.

Fourth quarter sales in the domestic market held virtually equal to the same quarter last year, even though the comparative period included additional sales resulting from a threatened labour disruption in Ontario, it said.

The increase in sales was driven by the company`s contract bottling business, in addition to increased shipment volumes to international customers.

"Challenging economic conditions continued to impact consumer consumption, which also contributed to increasingly competitive market conditions, primarily in the form of aggressive price discounting," the company said in a statement.

Interest income earned from cash deposits decreased by $1.2 million this year versus last, as a result of historically low interest rates around the world.

"I am pleased with the company's recent performance during such turbulent economic conditions. We continue to strive to increase sales and maximize earnings, while expanding the visibility of Corby's brand portfolio in the Canadian spirits and wine markets," said president and CEO Patrick O'Driscoll.

For the year, net earnings and earnings per share amounted to $20.7 million and $0.73, respectively, compared to $30.4 million and $1.07 per share during fiscal 2009, largely due to the impact of a non-cash impairment charge related to Corby`s underperforming Seagram Coolers business. The impairment charge reduced net earnings for the year by $9.4 million.

Operating revenues for the year also decreased to $162.2 million versus $169.3 million last year.

Corby has $74.7 million currently on deposit in a cash management pool with Pernod Ricard and its other affiliates and has no long-term debt. The company declared a dividend of $0.14 per share payable on September 30, 2010.

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