Moa 1H loss widens following restructuring, sales jump 71%

Moa Group posted a wider first-half loss after the unprofitable boutique beer maker restructured its fledgling business and changed distribution and brewing arrangements to underpin future growth.

The Auckland-based company posted a loss of $3.21 million, or 9.5 cents a share, in the six months ended Sept. 30, from a loss of $3.04 million, or 10.1 cents, a year earlier, it said in a statement.

Revenue rose 71 percent to $2.5 million, while the company took a one-time charge of $438,000 to write down packaging, old stock, plant and glass moulds following its decision to change its local supplier. That compares with one-time charges of $353,000 in the year-earlier period to end its New Zealand and Australian distribution agreements.

Moa, headed by chief executive Geoff Ross and chairman Grant Baker who developed the 42 Below vodka brand, has changed to a more direct distribution model, contracting out brewing for many products to McCashin's brewery in Nelson and raising $5.75 million from shareholders to fund growth. The company's gross profit margin improved to 19.7 percent in the first half, from 13.6 percent a year earlier as it focused on improving New Zealand sales.

"We expect to see improvements in gross margin as we bank the gains from changes in operational processes, including new contracted production, bottle supply, packaging formats and the benefits of further volume growth," Ross said in the statement. "We are well capitalised and well positioned for future growth. The coming 12 months will see a continued focus on New Zealand to build the right foundations before we increase our focus on larger export markets, in particular Australia followed by the United States."

Moa's New Zealand unit posted a wider loss of $2.09 million on an earnings before interest, tax, depreciation, amortisation and one-time items basis, from a loss of $1.91 million in the year-earlier period. Sales almost tripled to $1.86 million from $652,000.

The company said its share of the New Zealand grocery craft beer market rose to 8.7 percent in the three months through October, from 7.2 percent in the three months through July, and ahead of its 3.8 percent share a year ago.

However it was "barely scratching the surface" of the New Zealand beer market and believes there is still "substantial opportunity", signalling its New Zealand growth would continue "at a similar pace", the company said.

"While still comparatively small, the craft beer category is in high growth," the company said. "A small number of players (will) go on to become key participants and market leaders. We believe our current structure in both financial and people capital has us well positioned to do so."

In Australia, where its products are now sold at the Woolworths-owned national liquor chains Dan Murphy's and BWS, Moa's Ebitda loss widened to $381,000 from $224,000 as sales soared to $453,000 from $79,000. Meanwhile in the US, the Ebitda loss narrowed to $260,000 from $546,000 as sales slipped to $56,000 from $484,000, the company said.

"Once we have a solid position built in New Zealand and Australia, we can then deploy more effort into the US," Moa said. "We expect small volumes from the US this year, as we follow this strategy."

Moa said sales should pick up in the second half of the year, reflecting the busier summer months in its key markets of New Zealand and Australia.

"Continued increases in sales volumes, improving gross profit margins and containing costs will not only build Moa market share, but also give us confidence that we are en-route to a point where the business will be profitable," the company said. "We expect to see considerable improvements over the coming months."

The company didn't declare a first-hand dividend. Its shares last changed hands at 43 cents, down 66 percent from its November 2012 initial public offer price of $1.25.