Rising costs stem profit flow at Scottish water giant

HIGHLAND Spring has cited the impact of rising costs as profits at the water firm tumbled in its most recent financial year. The Perthshire-based firm saw pre-tax profits plunge to GBP520,000 for the year ended December 31, down from GBP3.3m last time, as it grappled with the increasing cost of raw materials, notably for PET (polyethylene terephthalate) plastic. Its underlying operating profit fell by 43 per cent to GBP2.37 million.

Rising costs have been a continuing concern for the business[1], which cited the effects of higher overheads, notably for PET, in its accounts for 2017 and 2016. While profits dipped last year at Highland Spring, owned by Middle East businessman Mahdi Al Tajir and his family, sales remained above GBP110m. The brand now sells more than 300 million litres of water annually.

READ MORE: Highland Spring secures funding for green moves amid plastic bottle controversy[2] The results came as Highland Spring takes steps to reduce its use of PET plastic amid growing concern over its impact on the environment[3], with the firm targeting a 20% reduction in the use of the material in its packaging by 2020. In August the firm, which has 489 staff, secured bank funding of GBP55.5m from HSBC, part of which will support its moves to make its operations greener.

Highland Spring noted that its branded "eco" bottle, which is 100% recycled and recyclable, has now been rolled out permanently across the UK, following a trial period in 2018. The "eco" bottle is now available on the brand's 50cl, 75cl and kids' bottled water formats. The firm signalled its support for the introduction of a "well-designed" deposit return scheme in Scotland, England and Wales, which it said would improve the availability of "good quality" recycled materials.

And it highlighted the environmental benefits of the new rail siding it plans to develop next to its main bottling plant in Blackford, Perthshire. READ MORE: R&A calls time on plastic bottles at The Open[4] The facility, which is being planned with Transport[5] Scotland, Network Rail and the Scottish Government, will allow the business to move goods in a "more environmentally-sustainable way", the firm said, removing around 8,000 truck journeys from the road per year.

This would eliminate 3,200 tonnes of carbon dioxide emissions, added the firm, which expects to appoint a civil engineering contractor to the project shortly. Mark Steven, chief operating officer, said: "Ultimately, we are on a journey to reach 100% recycled PET across all Highland Spring products. "However, we believe there is much work to be done first on increasing recycling rates, recycling infrastructure and ensuring consumers understand that all PET plastic bottles can be recycled, giving them multiple lives, to increase the availability of high quality recycled materials in the UK.

"Therefore, our environmental ambitions are focused on a target of 50% recycled content in our bottles by 2022, and the continued expansion of our 100% recycled eco bottle range." Reporting its results yesterday, the firm said it had partially offset higher costs by improving production efficiencies at Blackford, and through a focus on supply chain management. "These improved efficiencies also helped us deliver higher levels of customer service and maximise sales in periods of peak demand," the firm said.

Meanwhile, asked whether the firm has taken any steps to prepare for a no-deal Brexit, Mr Steven said: "97% of the group sales are in the UK, with the balance of export sales being spread across Europe, the Middle-East, Far East and North America.

"We consider there is a minimal risk of disruption to the ongoing supply of either Highland Spring brands, or retailer brands, produced by the Highland Spring Group in the event of a no-deal Brexit.

Like any responsible business, we will continue to monitor the situation as it continues to evolve."

References

  1. ^ business (www.heraldscotland.com)
  2. ^ Highland Spring secures funding for green moves amid plastic bottle controversy (www.heraldscotland.com)
  3. ^ environment (www.heraldscotland.com)
  4. ^ R&A calls time on plastic bottles at The Open (www.heraldscotland.com)
  5. ^ Transport (www.heraldscotland.com)

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