Gage Roads Brewing Co has reported a slight decline in like-for-like earnings for the first half of FY17, but the company says its underlying sales are encouraging.
The brewer reported EBITDA of $2.8 million for the half year ended December 31, 2016, up 43 per cent on the previous corresponding period.
However, this impressive figure was influenced by two extraordinary items. During the half, Gage Roads received compensation of $816,000 from brewing equipment supplier Krones, relating to a commissioning issue in 2014. The brewer also received a $150,000 microbrewery excise refund from the ATO.
Excluding these two one-offs, the brewer’s like-for-like earnings were actually $1.8 million, a slight decline on the $1.96 million that can be extrapolated from the previous year.
This was despite a 24 per cent increase in sales through the national chains, a 244 per cent increase in sales to the independent retail channel, and a 184 per cent increase in on-premise draught sales.
Gage Roads CEO John Hoedemaker said these sales uplifts did not translate to improved earnings because of a “temporary inventory adjustment” in the national chains that was foreshadowed last year.
“They had quite a reasonable inventory of our brands at the beginning of the year, so although underlying consumer demand for our brands is up 24 per cent compared to the first half of financial year 2016, our actual sales have been lower,” he told Australian Brews News.
Gage Roads said that with inventory balances now normalised and strong underlying consumer demand, the first half-year imbalance should be reversed during the second half, in line with previous expectations.