Gage Roads warns of big beer loss

Gage Roads Brewing has warned a production problem at its Palmyra plant has forced it to throw out 140,000 cartons of its beer, costing $1.12 million in gross profit.

The company attributed the loss to a recent processing fault during the commissioning of some remaining items of its new brew house project.

"Whilst the cause of the fault has been identified and corrective action is being taken, products manufactured during the period have not met the company's strict quality assurance standards and will not be released to market," Gage Roads said in a statement.

"This loss of gross profit will directly impact earnings in the second half of FY14."

Managing director John Hoedemaker said while the disruption and earnings impact were disappointing for the company, employees and shareholders alike, it represented a short term challenge as the business worked to commission new machinery and minimise operational risks resulting from the very fast growth in sales, production and earnings that had occurred over the past few years.

"Our strong sales growth, customer relationships and long-term objectives of the company are on track and I remain committed to delivering on our four-year plan, including earnings growth through diversification and growth of revenue streams, improvement in manufacturing costs and taking advantage of the burgeoning craft beer market," he said.

Gage Roads shares closed down one cent, or 5.41 per cent, at 17.5 cents.

The West Australian

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