Shares of Gage Roads Brewing Co Limited (ASX: GRB) soared as much as 19.6% this morning after the brewer released its fourth quarter sales results. The shares have since retreated marginally, but are still trading 16.1% higher.
Gage Roads has had a tough run in recent years, but the fourth quarter results were certainly a move in the right direction. It sold 89,000 carton equivalents of its proprietary craft beer during the quarter – up 76% on the prior corresponding period (pcp) – while its draught sales were up 280% over the pcp.
What’s more, it achieved growth of 83% in proprietary craft beer sales for the full year to roughly 350,000 carton equivalents. In its third-quarter report in April, it said sales were on track to exceed 300,000 carton equivalents, so the result was far greater than many would have expected.
For the year, Gage Roads said revenue was up 5% on the pcp to $25.5 million while its gross profit lifted to 52%, up from 51%. Meanwhile, it recorded a net profit after tax (NPAT) of $0.6 million (although this still needs to be audited) compared to a $0.8 million loss in FY15. Operating cash flows for the quarter were $1.8 million (compared to $2.4 million for the entire year) thanks to higher cash receipts during the period.
During the quarter, Gage Roads also extended its deal with major customer pinnacle Liquor Group – a subsidiary of Woolworths Limited (ASX: WOW). Although the contracted minimum volumes will decline towards the end of the contract period, the deal will still help to mitigate short-term risks facing Gage Roads which is part of the reason its shares have managed to bounce to 6.5 cents, from a low of 4.1 cents.
Indeed, Gage Roads still has a lot to prove, but its quarterly results were certainly an improvement.
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