Sales of Gage Roads Brewing Company’s proprietary products are up 16 per cent on the same time last year, the company reports.
Large inventory balances in the national chains at the beginning of FY18 resulted in lower replenishments in the quarter, contributing to a softer first half, Gage Roads informed the ASX on Wednesday.
“During the half-year, continued strong consumer demand at store level has reduced the inventory balances to normal levels and we expect full year sales to the national chains to meet expectations,” the brewer said.
“Despite the softer sales to the national chains, the strong growth in the independent retail and draught channels resulted in total proprietary brands sales for the half-year being up 16 per cent to 1.85 million litres in comparison to H1 FY17 (1.6 million litres).”
The Gage Roads brand had a stronger second quarter, in which it was up 56 per cent on the previous corresponding period, according to the company.
“The uplift in sales was driven by a 165 per cent increase in sales to the independent retail channel, a tripling of keg sales as well as a 13 per cent improvement in proprietary
brands sales to the national retail chains when compared to Q2 FY17,” Gage Roads said.
“Higher-margin, on-premise draught sales have continued to perform well, delivering a sales uplift of 167 per cent over H1 FY17.
“Excluding sales to Optus Stadium and marketing events, draught volumes are up 121 per cent.
“Sales to the independent retail channel were a solid contributor to the first half result, up 184 per cent over H1 2017.”
The Company recorded an unaudited EBITDA result of $1.3 million for H1 FY18 (down $1.5 million from H1 FY17: $2.8 million), which it said was in keeping with expectations.
“In comparing the two results, we note that the prior year result included $0.9 million in non-recurring other income relating to a settlement with an equipment supplier and a tax refund,” Gage Roads said.
“In keeping with the strategic plan to increase marketing activities and improve gross profit margins, the company invested $1.1 million (unaudited) more in sales and marketing in H1 FY18 than the previous half-year and delivered an incremental $0.5 million in earnings (unaudited) as a result of improved gross profit margins.”
The impact of the Optus Stadium contract on Gage Roads’ cashflows will become clear in the third quarter of FY18, the company said.