Vancouver, British Columbia - Oct. 29, 2008 - Russell Breweries Inc., a producer of premium craft beer, today reported consolidated results for its fourth quarter and year end June 30, 2008 These results include the operations of wholly owned subsidiaries, Russell Brewing Company in British Columbia and Fort Garry Brewing Company in Manitoba. Results from Fort Garry operations are from October 23, 2007 to June 30, 2008.
Net sales for Q4 2008 increased $1,014,000 or 220% to $1,474,000 compared to $460,000 for Q4 2007 as a result of a $889,000 net sales contribution from Fort Garry operations and from a sales volume increase from the Company's British Columbia operations. Net sales for FY 2008 increased $2,643,000 or 200% to $3,967,000 compared to $1,324,000 for FY 2007, also due to the impact of Fort Garry net sales of $2,102,000 and volume sales growth in British Columbia operations.
Net loss for Q4 2008 increased $745,000 to $1,163,000 or $0.03 loss per share compared to $418,000 or $0.03 loss per share for Q4 2007. Net loss grew principally as a result of increased selling, general and administration costs and a decline in gross margins arising from the acquisition. Fort Garry contributed $60,000 of the loss. Net Loss for FY 2008 grew $1,917,000 to $3,031,000 or $0.12 loss per share compared to $1,114,000 or $0.08 loss per share for FY 2007, principally due to increased selling, general and administration costs.
Gross margin for Q4 2008 declined 20 points to 52% compared to 72% in Q4 2007 as a result of the impact of lower margin products sold in the Manitoba market and increased materials, freight and amortization of keg costs in British Columbia operations. Gross margin for FY 2008 declined 14% to 59% compared to 73% for FY 2007 also due to the impact of Fort Garry and overall increased costs for materials, freight and keg amortization in British Columbia operations.
Selling, general and administration expenses for Q4 2008 increased $759,000 or 118% to $1,404,000 compared to $645,000 in Q4 2007. Fort Garry expenses contributed $155,000 of this increase and the balance of increase principally reflects the growth of British Columbia sales and related operations and brewing facilities, as well as increased expenses in professional fees, advertising and promotion, investor relations and travel expenses. Selling, general and administration expenses for FY 2008 increased $2,319,000 or 126% to $4,161,000 compared to $1,842,000 for FY 2007. Fort Garry contributed $700,000 of this increase and stock based compensation contributed a $499,000 increase to $735,000 compared to $236,000 in FY 2007. Advertising and marketing expense increased $509,000 as a result of increased expenditures on brand awareness and expensing most of the new 3 year BC Lions and BC Place sponsorship fee in the FY 2008 period.
Labour expense increased $385,000 to $804,000 in FY 2008 and professional fees increased $215,000 to $265,000 in FY 2008 reflecting increased audit fee and other legal expenses. Various other expenses increased in FY 2008 across most categories, reflecting the growth in sales, larger facilities and business operations as well as more corporate activities and travel expenses compared to FY 2007.
"On balance, the Company continues to perform as expected by management," says Brian Harris, CEO. "The three month delay in the anticipated closing on the acquisition of Fort Garry plus the onetime costs connected to the acquisition, and increased expenditures for raw materials and marketing during the year, had an impact on our expected bottom line. That being said, the platform is now in place to drive future profitable growth."
For further details the Company's complete MD&A and financial statements for the three and twelve months ended June 30, 2008 will be available on SEDAR at www.sedar.com and the Company's web site at www.russellbeer.com.
Russell Breweries Inc. (TSX VENTURE:RB) is a producer of premium craft beer in Western Canada. The Company owns Russell Brewing Company in British Columbia and Fort Garry Brewing Company in Manitoba. For more information on the Company's brands, go to www.russellbeer.com and www.fortgarry.com.
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