E-Malt.com News article: US, OR: Craft Brewers Alliance reports sharp drop in Q1 net profits

Craft Brewers Alliance has reported a sharp drop in first-quarter net profits, despite stronger beer sales.

The US-based brewer's net profits slumped by 92% for the three months to the end of March, to just US$16,000. The group also swung to operating losses of $61,000 versus profits of $642,000 in the same period of 2010.

"While we remain resolutely committed to increasing our profitability for the year, our bottom line performance was in line with our expectations and reflective of our aggressive investment against our sales and marketing initiatives," said Craft Brewers Alliance (CBA) chief executive, Terry Michaelson.

Net sales jumped by 18% over the three months, to $32.3 mln, boosted by higher prices and contract brewing, as well as a 15% rise in volume shipments to wholesalers. "Top-line growth was ahead of our expectations," said Michaelson.

Earlier this month, CBA said that it completed the sale of its 42% stake in Fulton Street Brewery, also known as Goose Island, to Anheuser-Busch InBev for US$16.3 mln. CBA said that it received $15 mln of this fee at closing and has used it to pay off debt.

The company expects to report a further one-off gain of $10.3 mln in the second quarter in relation to the stake sale. The gain will include "reimbursement for certain legal and professional fees it incurred in the evaluation of the transaction", said the group.

As part of the deal with AB InBev, CBA has also reduced the amount of distribution fees that it pays to the Budweiser brewer. AB InBev already holds a 32.25% stake in CBA, which operates the Widmer Brothers, Redhook and Kona breweries in the US.


20 May, 2011