Poor weather is one of the reasons for a drop in sales of more than £10 million at Perthshire-based water giants Highland Spring.
Their sales to the year ending 31 December 2019 were just over £100m, a drop from £110.5m the year before.
The firm also reported pre-tax losses of £2.6m. It had recorded profits of £520,000 in 2018.
TA total of 27 employees also left the Blackford firm, with their staff numbers dropping from 477 in 2018 to 450.
Confidence in the strategy
In his strategic report, chief executive Les Montgomery said that while it had been a “challenging” 12 months, the firm was confident in its long-term approach.
He said: “During 2019, Highland Spring extended its position as the UK’s leading natural source water brand against a backdrop of external cost challenges and poor summer weather conditions.
“We remain confident in our long-term approach of continuing to promote the provenance of our portfolio, category leading expertise, focus on environmental sustainability and overall value.”
The firm also reported an underlying operating loss of £594,000.
That was the result of poor weather, the decision to withdraw from private label business and increased polyethylene terephthalate plastic (PET) prices.
Mr Montgomery said: “The business has taken steps to improve operational efficiencies and reduce overhead costs through restructuring the group.”
He added that had “positively impacted operating profit in 2020.”
The Highland Spring Group, founded in 1979, bottles more than 400 million litres of water each year.
Its range of brands includes Hydr8, Speyside Glenlivet and private label flavoured and unflavoured waters supermarkets and retailers.
Its products are sold in more than 30 countries.
The UK water drinks market fell 3.8% in 2019. The decline is expected to continue as a result of the pandemic.
Mr Montgomery continued: “The market is expected to decline further in 2020 as a consequence of Covid-19 before bouncing back in 2021, with the longer-term forecast of low single digit growth per annum from 2022 to 2024.”
The figures do not set out the full impact of the pandemic on the water giants.
Highland Spring reported sales of 533 million litres during 2019, but its plain unflavoured water fell 8% from the previous year.
“Sales volumes were severely impacted by unfavourable weather conditions in the peak summer sales period,” the managing director added.
“In addition, sales volumes reduced following a decision not to retain an unsustainable contract that would reduce the overall profitability of the business.”
It added there had been “significant increases” in the costs of raw materials including packaging.
The firm has been moving toward a 20% reduction in its use of PET.
Mr Montgomery said it remains “focused and committed” to being environmentally sustainable.