US: Reed's losses leap in H1, remains upbeat for FY

Reed's has posted a doubling in losses for the first half of this year, despite a healthy lift in sales for the period.

The US-based natural soda producer said yesterday that net losses for the six months to the end of June soared to US$2.5m, from $1.2m in the corresponding period last year. Net sales, however, leapt by 25.4% to $8.1m, with the company crediting increases in its Virgil's and Reed's Ginger Brews product lines for the rise.

Operating loss followed the net loss performance, rising to $2.4m from 1.1m, with operating expenses leaping by 77.9% in the half to $4.2m thanks to increased promotional and advertising expenses.

For the second quarter, meanwhile, net losses shrank to $491,119 from $693,045 in Q2 last year, with net sales rising by 31.6% to $4.6m. Operating loss narrowed to $441,274 from $657,824.

Company founder and CEO, Chris Reed, pronounced himself "pleased" with Reed's second quarter performance. "During the second quarter our 2008 strategic initiatives aimed at increasing our presence in national grocery chains, improving gross margins and rationalising expenses began to take hold.

"We expect our positive momentum to carry into the back half of the year," Reed continued. "We will continue to evaluate methods to improve gross margin and enhance efficiencies in our operations."

Going forward, Reed's is expecting a 20% to 30% rise in full-year sales for 2008, as well as a sequential decrease in its operating expenses of approximately $300,000 to $400,000 in the third quarter of 2008 from the second quarter of 2008.