Moa targets costs after another loss

Last August, Moa raised $5.25 million in a rights issue and had $6.78 million in cash at hand as at September 30, down from $8 million a year earlier. Photo / Dean Purcell

Moa Group, the boutique beer-maker, says its full-year loss will be in line with last year's loss of $5.8 million, with its strategy to cut costs and fatten margins likely to start delivering benefits in 2016.

The unprofitable brewer, which went public in 2012 and counts Pioneer Capital and the Business Bakery as major shareholders, said sales in the year ending March 31 were expected to jump 40 per cent to more than 1.7 million litres, or the equivalent of five million bottles.

The Auckland-based company has overhauled its strategy since joining the NZX, outsourcing production of much of its beer to McCashin's Brewery in Nelson, leaving it to make higher-margin specialty brews at its Blenheim site.

It is now focused on growth in Australia, where its beers are sold through the Dan Murphy's and BWS liquor chains, and New Zealand.

In the US, China, Singapore and Brazil it has switched to a lower-growth model where the importer incurs in-market costs.

Moa has been trialling new, lower-cost packaging in open, six-pack baskets and went into full production this month, which it said would "help drive further margin improvement" in the coming financial year. It has also moved its premium reserve range to 500ml bottles from 335ml bottles, in keeping with the trend among craft brewers, and dumped the use of champagne corks in favour of crown seals.

Its gross margin jumped to 19.7 per cent in the first half from 13.6 per cent a year earlier.

"Overall, a continuation of improvement in gross margin is likely," said chief executive Geoff Ross. "As volume increases, we're able to get better cost-effectiveness on a per-unit basis."

Last August, Moa raised $5.25 million in a rights issue and had $6.78 million in cash at hand as at September 30, down from $8 million a year earlier. Shares yesterday were at 37c.