Russell Breweries Inc.
TSX VENTURE : RB

Russell Breweries Inc.

March 03, 2009 00:45 ET

Russell Breweries Inc. Announces 2nd Quarter and YTD 2009 Results

Q2 2009 Net sales Increase 40% to $1,351,000; Net Loss Increases 32% to $720,000

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 3, 2009) - Russell Breweries Inc. (TSX VENTURE:RB) a producer of premium craft beer, today reported consolidated results for its second quarter ("Q2 2009F") and for the six months ended December 31, 2008 ("YTD 2009F").

Net sales for Q2 2009F increased $389,000 or 40% to $1,351,000 compared to $962,000 for Q2 2008F as a result of the impact of the Company's newly acquired Fort Garry subsidiary ("Fort Garry") with net sales contribution of $778,000 (Q2 2008F: $575,000) and increased sales volume in the Company's British Columbia operating subsidiary Russell Brewing Company Ltd, from both new accounts and increased throughput from existing accounts compared to Q2 2008F of 48% ($573,000 in Q2 2009F vs. $387,000 in Q2 2008F). Although Q2 year to year net revenue was up, Q2 2009F to Q1 2009F net sales were down $348,000 due to normal seasonality and tougher economic climate. The Company expects to recover net sales in next quarter.

Net sales for YTD 2009F increased $1,636,000 or 116% to $3,050,000 compared to $1,414,000 for YTD 2008F also due to the impact of the Company's newly acquired Fort Garry ("Fort Garry") subsidiary with net sales contribution of $1,640,000 (2008F YTD: $575,000) and increased sales volume in the Company's British Columbia operating subsidiary Russell Brewing Company Ltd, from both new accounts and increased throughput from existing accounts compared to 2008F YTD of 68% ($1,409,000 in 2009F YTD vs. $839,000 in 2008F YTD).

Net loss for Q2 2009 increased $174,000 or 32% to $720,000 or $0.03 loss per share compared to $546,000 or $0.02 loss per share for Q2 2008F. Net loss grew principally as a result of increased selling, general and administration costs and a decline in gross margins. Fort Garry contributed $151,000 of the loss. Net Loss for YTD 2009F decreased $195,000 or 16% to $1,022,000 or $0.04 loss per share compared to $1,217,000 or $0.05 loss per share for YTD 2008F, principally due to decreased stock based compensation expense.

Gross margin for Q2 2009F declined 20% to 38% compared to 58% in Q2 2008F as a result of the impact of lower margin Fort Garry product and increased materials, freight and amortization of keg costs in British Columbia operations. Gross margin for YTD 2009F declined 16% to 48% compared to 64% for YTD 2008F 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 expense for Q2 2009F increased $63,803 or 7.61% to $902,100 compared to $838,297 for Q2 2008F. The significant increases were: labour expense increase of $71,553 to $251,926 compared to $180,373 in Q2 2008F, automotive increase of $22,135 to $59,727 compared to $37,592 in Q2 2008F, rent and utilities increase of $19,905 to $116,015 compared to $96,110 in Q2 2008F, and various other increases across most expense categories, which were offset by advertising and promotion decrease of $52,206 to $119,726 compared to $171,932 in Q2 2008F.

Selling, general and administration expense for 2009F YTD increased $24,758 or 1.39% to $1,805,390 compared to $1,780,632 for 2008F YTD. The increases were: labour expense increase of $158,524 to $506,881 compared to $348,357 in 2008F YTD, automotive increase of $37,686 to $102,231 compared to $64,545 in 2008F YTD, rent and utilities increase of $68,292 to $197,404 compared to $129,112 in 2008F YTD, and various other increases across most expense categories, which were offset by stock based compensation decrease of $280,800 to $nil compared to $280,800 in 2008F YTD.

Q2 2008F and YTD 2008F results include the operations of Fort Garry Brewing operations from October 23, 2007.

"The acquisition of Fort Garry on October 22, 2007 continues to have a positive impact on our Company's first six months of 2009F as well as 2008F results. Russell's BC operations also continue to grow compared with comparative quarter," said Andrew Harris, President. "Although Q2 year to year net sales were up, Q2 2009F to Q1 2009F net sales were down $348,000 due to normal seasonality. We expect continued growth in both BC and Manitoba as we move into the summer season primarily from the introduction of more of our products in bottles and cans for the take home market."

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 Brewing Company Ltd. produces premium beer in British Columbia. Products include: Russell Cream Ale, Russell Pale Ale, Russell Honey Blonde Ale, Russell Extra Special Lager plus two seasonal brews, Russell Lemon Ale and Russell Winter Porter. Fort Garry Brewing Company Ltd. is Manitoba's largest brewer and distributor of premium quality beers including Fort Garry Dark Ale, Fort Garry Pale Ale, Fort Garry Premium Light, Fort Garry Red and Stone Cold Lager. Russell Brewing Company Ltd. and Fort Garry Brewing Company Ltd. are wholly owned subsidiaries of Russell Breweries Inc. (TSX VENTURE:RB).

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information