• Q1 net profits drop by 16.6% to US$63.5m
  • Net sales increase by 6.5% to $484.2m
  • Operating profits fall by 15%, hitting $107.3m
  • Legal costs reach $3m
Monster released its Q1 results yesterday

Monster released its Q1 results yesterday

Monster Beverage Corp has seen a slowdown in sales growth as legal fees took a bite out of its first-quarter profits.

Net profits fell by 16.6% to US$63.5m in the three months to the end of March, the US energy drinks maker said yesterday (8 May). Net sales climbed by 6.5% to $484.2m over the same period, while operating profits dropped by 15% to $107.3m.

Profits were hit by $3m in legal costs related to regulatory matters and law suits over its brands, the company said. Monster is locked in a court room fight with San Francisco's attorney general, Dennis Herrera, after he launched a probe into the company's alleged marketing to children.

The group is also facing a lawsuit from the family of a 14-year-old girl who died after allegedly drinking two 24oz cans of Monster. Monster denies the claim.

Further damage to Monster's bottom line was done by $8.3m in costs incurred from the termination of distributors and a $4.7m loss from currency exchanges. However, it was the slowdown in sales growth that spooked investors, resulting in a 12% share price drop in after-hours trading. In 2012, net sales climbed by 21% while in 2011 sales were up by 30%.

Monster CEO, Rodney Sacks, remained upbeat. “Despite the single digit category growth rates we are seeing, the Monster Energy brand continued to grow in excess of category growth, both in North America and Europe,” Sacks said.

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