The downgrade club keeps growing and the share market performance of those company cutting forecasts or reporting lower revenues and earnings keeps following a familiar route – down, down and down.
So it should be no surprise that shares in Perth-based beer brewer Gage Roads lost more than 16% yesterday after the company joined the growing list of downgraders by warning investors sales volume across national liquor chains for its December half had dropped 25%.
The slide, from 1.4 million litres to one million was blamed on excess inventory and changing contract agreements for the company’s largest national chain customer.
Gage Road brews a number of popular beer ranges, including Atomic, Single Fin, and ginger beer brand Matso’s.
Gage axed a number of products which saw sales slide as consumers rejected them with the result that the company saw a 400,000 litre shortfall in sales, with the replacement new products not being accepted by national chains, leading to a 400,000 litre shortfall in sales in sales.
Overall revenue rose 10% to $19.3 million in the half-year. But while gross profit increased 12% to $13.3 million earnings before interest tax depreciation and amortisation sunk to just $0.3 million, compared to $2.1 million in the first half of 2019.
Managing director John Hoedemaker warned the company was unlikely to meet its goal of 25 to 30% EBITDA growth for the 2020 financial year.
The shares ended down 16.6% at 6.5 cents and hit a year low of 6.3 cents in trading.
The small-cap beer slinger has a number of institutional investors on its books, including Perennial, Commonwealth Bank, AustralianSuper, and Mitsubishi UFJ, and Spheria Asset Management.
