US: Boston Beer Co H1 profits dive but volumes rise

By | 2 August 2012

  • Net profits for six months to end of June down 31.9% to US$21.8m 
  • Net sales reach $260.8m, up by 10.5% over same period 
  • Operating profits fall by 31.6% to $35.2m
  • Shipment volumes up by 7%
The Boston Beer Co, which brews Samual Adams, saw shipments grow

The Boston Beer Co, which brews Samual Adams, saw shipments grow

The Boston Beer Co has reported a mixed first-half performance as profits fell due to a tough prior-year comparable. 

Net profits for the six months to the end of June fell by 31.9% to US$21.8m, the US-based craft brewer, said yesterday (1 Aug). Operating profits also took a dive for the Samuel Adams brewer, as a $20.5m windfall from a glass recall settlement in 2011 forced a difficult comparable. 

However, underlying performance looked solid, with net sales up by 10.5% and core shipments in the first-half of the year up by 7% to around 1,226,000 barrels.

Boston Beer Co CEO & president Martin Roper was pleased with the company's growth, including a Q2 depletions growth of 7% and 9% for H1. 

“In the second quarter our depletions growth benefited from strength in our Samuel Adams Seasonal, Twisted Tea and Angry Orchard brands, offset by some slight decline in some of our other Samuel Adams brand styles,” Roper said. 

Marketing costs rose by $6.5m year-on-year in H1, due to more sales staff, extra investments in advertising and local marketing and higher costs of freight to wholesalers, the company said.

Administrative costs were also up, by $2.9m, due partly to salary and benefits costs.

Roper said the company will add more sales staff to continue the companies gains in the competitive US craft beer market, which big brewers have moved in to in search of high margins on premium products. 

“We are prepared to forsake some earnings in the short-term as we make appropriate investments in brand-building activities and capital improvements in our brewing and packaging capabilities to position us well for long-term growth,” Roper said.

The company left its full-year earnings projections unchanged, saying lower fuel prices and stronger depletions in H2 will likely be offset by increased brand investment.

The company's Freshest Beer Program, which is intended to reduce the time-lag between beer leaving the brewery and reaching the consumer, has had a negative impact on shipment volume. Roper said the programme has improved efficiency throughout the supply chain and is expected to expand.

Boston Beer Co's share price slipped 1% by the end of trading yesterday. 

To read just-drinks' coverage of Boston Beer Co's H1 conference call, click here.

To find out analysts' reaction to the company's performance, click here.

To read the company's official statement, click here.

Sectors: Beer & cider, Company results

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