US: Strong Q2 for Boston Beer, but recall hampers first half
The Boston Beer Company has reversed its losses in Q1 with a healthy performance in its second quarter.
The US-based craft brewer said today (6 August) that net profit in the three months to the end of June rose to US$8.5m from $6.8m in the corresponding period a year earlier. The increase came on the back of strong sales, which were up by 26% to $117.4m, while operating profit climbed to $14.9m from $10.5m in Q2 last year.
For the first half of 2008, however, a product recall, which took place in April, hit the company's results, with net profit more than halving to $4.8m from $12.6m in 2007. Sales were up in the half by 17% to $193.5m, although operating profit slumped to $7.6m from $19.1m.
Earlier this year, Boston Beer announced a voluntary product recall in the US of a run of 12oz bottles of its Samuel Adams beer brand, which may have contained "small grains or bits of glass".
"In our first quarter financial results, we took various charges for this recall, based on the best available information at that time," said Boston's president and CEO, Martin Roper. "Our estimates are now higher than previously reported, as more data has become available. The after-tax impact of these additional provisions in the second quarter was $2.8m."
"We also believe that we have experienced lost sales at retail which probably contributed somewhat to the slower growth rate in depletions for the second quarter," Roper added. "For the first six months of 2008, to reflect the current known estimated impact of this recall, we reversed approximately 725,000 case equivalents of shipments, which translates to approximately $12.3m of sales credits, and recorded approximately $8.3m as recall costs. The after-tax impact of these provisions was $11.6m."
Excluding the impact of the recall, Boston said, the company still expects 2008 earnings per diluted share to be between $1.70 and $2.00. Including the impact of the recall, however, Boston expects 2008 earnings per diluted share to be between $0.85 and $1.15.
Sectors: Beer & cider
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