Bad weather dampens Brick Brewing's Q2 profit
Profits at Brick Brewing Co. fell flat in the second quarter of fiscal 2009 as beer sales dropped while expenses increased.
Waterloo, Ont.-based Brick earned $1,000 for the three months ended July 31 compared to a profit of $283,000 for the same period last year.
Brick did not earn or lose money on a per-share basis in the most recent quarter. That was compared to a profit of a penny a share in the second quarter last year.
Brick's fiscal 2009 runs from the end of January 2008 until the end of January next year.
A big problem, Brick said, was the poor summer weather in Canada's most populous province.
"The rainiest summer on record in Ontario was responsible for an overall industry volume decline during this period," Brick said in its earnings release.
The company posted net revenue, after subtracting distribution fees and production taxes, of $8.68 million in the second quarter. That level represented a drop of nearly 10 per cent versus Brick's net sales of $9.63 million this time last year.
Costs were another negative factor weighing down the company's financial results.
"Rising commodity costs continue to be a challenge and have reduced our earnings by $372 thousand in the quarter," said George Croft, president and CEO of Brick Brewing.
Three month stock chart for Brick Brewing"We must continue to streamline our operations and seek to eliminate all non-strategic costs in the organization to offset these increased input costs," he added.
Since the beginning of September, Brick announced a new partnership to sell Belgium beers and the resolution of a long-standing legal dispute with Brewers Retails Inc.
Foreign discounts hurt salesIn an earlier interview, Croft said both moves were taken to begin to improve Brick's sales volumes.
Brick ended its fight with the Brewers Retail over the reintroduction of the long-necked bottle to cut costs and remove a distraction for company management, he said.
Brick's sales have also been hurt by foreign brewers who discounted their brands in Ontario.
The new partnership will give Brick an entry into a rapidly growing beer segment, Belgium-style brews.
As a craft brewer, Brick's strategy is to sell more premium suds, to grab a larger share of this smaller but more profitable, segment of Ontario's stagnant beer market, Croft noted.
Brick has been seeking to turn its financial fortunes around for more than a year, with the company last year hiring an investment firm. In many cases, such a move is a thinly veiled attempt to find a purchase for the corporation.
This time around, Croft said Brick is not interested in finding a buyer.
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