• Q1 net losses widen by 33.7% to US$365,000
  • Modified EBITDA drops by 82.4% to $30,000
  • Net sales increase by 28% to $5.1m
  • Net losses due to rising costs and an increase in promotional activity
Reeds sees its net losses widen in the first quarter

Reed's sees its net losses widen in the first quarter

Reed's has reported deeper net losses in the first quarter of 2011, despite a jump in drinks sales.

For the three months to the end of March, the company reported a 33.7% increase in net losses to US$365,000. EBITDA dropped by 82.4% to $30,000, Reed's said yesterday (16 May).

However, net sales in the period climbed by 28% on the first quarter of 2010, to $5.1m.

Reed's blamed the losses in the quarter on “three factors of roughly equal impact”.

"First, our ingredient and packaging costs have increased during the past few quarters, a challenge impacting our entire industry,” said Reed's CFO, James Linesch. “Second, our promotions are up from the prior year as a percentage of sales, which is a deduction from revenues. Third, our plant utilisation was off, causing more fixed costs that were not allocated to product costs.”

Based on changes in all three areas, Linesch said the company is seeing “margin improvements” that it anticipates will continue for the remainder of the year.

Click here to view the earnings release.