Boston Beer reports 46% drop in profit despite record earnings
In spite of record third quarter net revenue of $84.1 million, an increase of 10.9 percent over the same period last year, Boston Beer Company Inc. reported a 46 percent drop in quarterly profit due to higher costs and cut its full-year outlook, sending company stock prices plummeting down more than 25 percent.
The increased revenue was driven by a 11.2 percent core shipment volume increase and an increase in revenue per barrel of approximately 4.8%. Depletions were up 15.6 percent for the same period. Year-to-date core brand shipments were up 15.8 percent for the nine month period versus the same period in 2006.
Craft brewers have been confronted with radically rising costs for barley and hops, glass and stainless steel and this is the first earnings report that reflects those challenges..
Though the rising costs were expected, the magnitude is somewhat surprising. The company expects an increase in production cost of between 10 and 14 percent in 2008, driven primarily by malt and hop costs.