US: Boston Beer Co posts Q1 profits drop as costs rise

By | 2 May 2013

  • Q1 like-for-like net profits down by 7.8% to US$6.8m
  • Net sales increase by 19% to $146.4m
  • Operating profits fall by 18%, hitting $9.7m
  • Samual Adams brand sees sales drop
Boston Beers Samuel Adams brand saw sales decline

Boston Beer's Samuel Adams brand saw sales decline

The Boston Beer Co has posted a big jump in first-quarter sales, but higher costs and a bigger marketing spend bit into profits.

Net profits in the three months to 30 March fell by 7.8% to US$6.8m, the brewer said yesterday (1 May). Net sales increased by 19% to $146.4m over the same period, while operating profits dropped by 18% to $9.7m.

The numbers mirror Boston Beer's 2012 results, released in February, when cost of goods saw profits slip by 10% despite a marked increase in sales.

Boston Beer founder & chairman Jim Koch said: “While we continue to experience increased competitive activities from both domestic speciality and craft beer brands that have made it challenging to grow Samuel Adams as fast as we would like, we remain positive about the future of craft beer and our potential for long term growth.”

Boston's strong sales performance, driven mainly by Angry Orchard and Twisted Tea, was offset by a “slight” decline in the Samuel Adams brand, the company said. It blamed a miss on expectations over its seasonal selling programme during the quarter, without giving details, but added that increased brand investment, including a new “Sam Cam”, unveiled in February, will target long-term growth.

On profits, a 1% price increase in the quarter failed to offset a 19% ($7.2m) rise in advertising, promotional and selling expenses, the company said. Gross margins were put under increased pressure, dropping from 55% to 50%.

Shipment volumes were more positive, up 18% to 632,000 barrels compared to the same quarter last year.

Looking ahead, Boston Beer said it has left unchanged its 2013 projection earnings per diluted share of between $4.70 and $5.10.

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

Expert analysis

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Sectors: Beer & cider, Company results

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