ASX-listed Broo has said that it expects to be profitable in the next financial year through domestic sales alone after reporting an increase in revenues, despite increased losses according to results posted to the market last week.
Revenues were reportedly up 41.8 per cent to $3.7 million. However losses widened by 28.8 per cent to $3.2 million.
Cost of sales for the year increased to $3.2 million, and at the end of the year the Victorian company had cash or cash equivalents of $427,215.
Broo raised $400,000 in an off-market share issue in July this year from an unnamed investor.
Founder and CEO Kent Grogan told Brews News that the results were as expected, and that the company is “continuing to reduce operational costs” across the group.
“These reductions in conjunction with release of new product lines and continued sales growth make us confident of becoming profitable this financial year from domestic activities alone.
“The Company is focused on significant Australian expansion over the next 12 months, the first instalment was the recent agreement in QLD, however we have a number of additional opportunities to work through including further penetration of products that have been tested and proven in the market place across several categories,” he said.
“We are now working through growth schedules for these lines and will make further updates accordingly.”
This is despite telling Australian Brews News 12 months ago that he expected “big things” to happen over the past year.
“We’re very comfortable where we are, and we’re pretty excited about the next 12 months,” Grogan told Brews News, after announcing last year’s $4.4 million loss.
“We’ve got a lot happening. So no reason for concern,” he said in what is now a familiar mantra.
Broo recently signed a distribution agreement with a Bundaberg-based organisation The East End Hotels Group, which comes with a 2 million litre sales target. Broo said it currently sells 500,000 litres a year in Queensland.
This refocus on the domestic market is in contrast to previous years, which saw Broo sign up to a distribution agreement with Chinese distributor Beijing Jihua Information Consultant.
The ‘take or pay’ deal based on 1.5 billion litres of Broo Premium Lager over a seven-year period will see Jihua paying a fixed rate per litre, it said.
Broo values the distribution arrangement at approximately $120 million over the seven-year contract, and will see the first payout in December 2020.
Broo is yet to receive a payment under the China deal.