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Moa sees full-year loss similar to 2014's $5.8 mln, recovery in 2016

17 Mar 2015

Moa Group, the boutique beer maker, says its full-year loss will be in line with 2014's loss of $5.8 million, with its strategy to cut costs and fatten margins likely to start delivering benefits in 2016.

The unprofitable brewer, which went public in 2012 and counts Pioneer Capital and the Business Bakery as major shareholders, said sales in the year ending March 31 are expected to jump 40 percent to more than 1.7 million litres, or the equivalent of 5 million bottles.

The Auckland-based company has overhauled its strategy since joining the NZX, outsourcing production of much of its beer to McCashin's Brewery in Nelson, leaving it to make higher-margin specialty brews at its Blenheim site. It is now focussed on growth in Australia, where its beers are sold through the Dan Murphy's and BWS liquor chains, and New Zealand. In the US, China, Singapore and Brazil it has switched to a lower-growth model where the importer incurs in-market costs.

Moa has been trialling new, lower-cost packaging in open, six-pack baskets and went into full production this month, which it said would "help drive further margin improvement" in the coming financial year. It has also moved its premium reserve range to 500ml bottles from 335ml bottles, in keeping with the trend among craft brewers, and dumped the use of champagne corks in favour of crown seals. Its gross margin jumped to 19.7 percent in the first half from 13.6 percent a year earlier.

"Overall, a continuation of improvement in gross margin is likely," chief executive Geoff Ross told BusinessDesk. "As volume increases, we're able to get better cost-effectiveness on a per-unit basis."

Last August, Moa raised $5.25 million in a rights issue and had $6.78 million in cash at hand as at Sept. 30, down from $8 million a year earlier. Ross said today that the company "is comfortable with its cash position." He declined to be more specific ahead of the release of the company's annual results.

Moa shares rose 2.7 percent to 38 cents on the NZX and have declined 26 percent in the past 12 months.

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