42 Below looking up despite $1.1m loss

By SIMON HENDERY

Spirits producer and exporter 42 Below yesterday reported its first full-year result as a listed company - a $1.125 million loss, which it described as "in line with expectations".

Sales of the company's 42 Below vodka and South gin for the 12 months to March 31 were worth $4.4 million, up from $504,000 during the 11 months to March 31 last year.

42 Below shares began trading on the NZX in October last year after a $15 million initial public offering.

Issued at 50c, the shares slumped to a low of 31c four months ago because of concerns that the IPO over-valued the company.

But the share price has clawed back, and closed yesterday up 2c at 51c. Original investors are in the money, as the shares were issued with free warrants.

The company said yesterday sales had exceeded prospectus forecasts made in September. The prospectus forecast sales of $4.45 million, although that was for the 12 months to September this year.

It did not contain profit forecasts.

The past year's $1.125 million loss compared with a $589,000 loss the previous year.

It was cushioned by the forgiving of a $1.16 million advance from the company's founding shareholders, revealed in its half-year result last November.

The company will not pay a dividend.

Yesterday it was keen to focus on its fast-growing revenue, saying sales had jumped from $1.09 million in the first half of the year to $3.32 million in the second half.

It achieved growth in all its markets by increasing sales through existing channels and adding new distributors overseas.

42 Below exports to nine countries.

Export successes over the past year have included winning approval to sell its feijoa and passionfruit flavoured vodka in the US, and a deal with Fosters Brewing International to sell to duty-free stores.

The company said that at the end of the past financial year it had cash of $10.68 million. It spent $3.12 million between October and March - $1.84 million to cover operating losses and $1.28 million on inventory and debtors.

42 Below is investigating six more export markets - France, Spain, the Czech Republic, Malaysia, Hong Kong and Thailand.

The company's managing director, Geoff Ross, said he was happy with the result, but the company was "focused on the journey ahead".

The current financial year had started well, he said.

"There is no reason to believe our growth is going to slow. We're very excited about the year ahead.

"We're as confident as ever of meeting our projections." Ross said the company's main focus would be on the huge American market.

"You've got to treat each state like a different country," he said. "It's such a big vodka market."