just On Call - Hansen Natural points to Europe operational issues
Yesterday (3 November), Hansen reported a 36% slide in net profits
Hansen Natural Corp has said that operational problems in some of its European regions contributed to a drop in profits in the first nine months of the year.
Yesterday (3 November), Hansen reported a 36% slide in net profits to US$221.7m for the period to the end of September. Speaking on the firm's earnings call yesterday, Hansen Natural's CEO, Rodney Sacks, told analysts that the company incurred "substantial increased operating losses" in the company's newer markets of Austria and Switzerland.
Sacks said that sales in the two regions had been affected by "various operational issues" on the part of its distributor and the introduction in Austria of "very cheap", private-label energy drinks.
"We are working together with our distributor to address the operational issues, but continued with planned expenditures during the quarter to build awareness for the Monster brand in those key countries," the CEO said.
"The biggest challenge we have in Europe is the private-label brand, which is taking the share at the bottom end of the market," he added. "And the retailers there are pretty powerful, so they promote their own store brands."
Nonetheless, Sacks told analysts that, overall, the company is "doing very nicely" in Europe, and the UK in particular.
Separately, Sacks pointed to issues facing the company in Asia.
"We are working towards launching," he said. "Probably the first market that we're going to be launching in is Korea, and then we're planning to launch in Japan ... but it's taking a lot more planning with our distribution partner there. They're much more cautious about everything, about inspecting ... every production site ... getting every ingredient analysed. It's a long process."
Sacks added that obtaining approval for its products in some regions has "been a challenge", due to the ban on energy drinks containing caffeine in South Korea.
However, the CEO said the company has now received approval for its products in the country and is in the process of planning a launch.
He added: "We're also looking at some other markets and are having some discussions with potential distribution partners. We did have discussions with one group, and that didn't move forward. We are making other plans and moving forward in Asia, but really, it'll be a much more visible in 2012."
In the US, Sacks said Hansen is in the process of launching three line extensions to its Monster Rehab line, with a fourth expected in 2012.
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