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Gage Roads profit plunges

Shares in Gage Roads Brewing were lower after the company posted a 71 per cent fall in first-half profit to $296,213.

The result came on an 8 per cent drop in revenue to $14.5 million over the period.

The weaker result was attributed to a general softening of trading conditions in the beer market, delays in executing the refresh of brands in time for successful ranging, distribution and promotion and weeks of lost sales because of customers reducing their inventories.

Gage Roads said the result was at odds with its ambitions and disappointing.

However the company said it remained confident about the outlook for the business, in particular the extension to the Woolworths Supply Agreement and debt guarantee, the brand refresh and resultant market response for Gage Roads' proprietary products as well as continued growth in other third party contract brewing opportunities.

"Whilst the softening of revenue towards break-even volumes has impacted on earnings, the first half results reinforce the fundamental core of our business strategy, which is to produce and sell in excess of two million cases per annum and move towards the three million case capacity of our Palmyra facility while maintaining strong margins and a relatively fixed cost structure," the company said.

Gage Roads said it continued to adhere closely to its growth plan, targeting steady growth in sales at consistent margins by way of a four tier sales strategy, utilising the expanded production capacity and fixed nature of the cost structure to provide scale and leveraged earnings growth.

Shares in the company were off half a cent, or 6.25 per cent, to 7.5 cents at 10.15am.