Castle Brands has posted a strong reduction in net losses for its first fiscal quarter.

The US-based spirits company said late last week that net losses in the three months to the end of June came in at US$559,000, compared to net losses of $4.3m in the corresponding quarter a year earlier. The firm credited the increase in common shares outstanding resulting from the $15m private placement and note conversion last October as contributing to the figures.

Sales for the quarter were flat, totalling $5.9m, while volume sales dipped to 61,669 nine-litre cases, versus 67,309 cases in the quarter a year ago. While US case sales rose slightly, international volumes fell to 10,241 cases from 18,372.

Operating losses fared well in the quarter, coming in at $1.9m compared to $3.8m in quarter one 2008.

The results included a foreign exchange gain of $1m due to a weakening US dollar as compared to a loss of $99,000 in the prior year period.

"We are pleased with the progress that we have made amidst challenging economic conditions," said Castle's president and CEO, Richard Lampen. "We will continue to focus on improving margins, controlling expenses and growing our own premium brands, as well as pursuing opportunistic brand acquisitions and agency relationships."

Earlier this year, Castle completed the repurchase of 1m common stock shares.

To see Castle Brands' last full-year results, click here.