Frederick Brewing reports loss of $1.9 million Joint ventures eyed to improve on 2nd-quarter results


August 07, 1998|By Kristine Henry | Kristine Henry,SUN STAFF

Frederick Brewing Co. reported a second-quarter loss yesterday of $1.9 million, double its $950,000 loss in the same quarter last year.

The loss amounted to 20 cents a share, with 9.5 million shares outstanding, vs. 45 cents in the same period last year, when the company had 2 million shares outstanding.

The Frederick-based craft brewery, whose lines include Blue Ridge and Hempen, warned of the loss last month when it announced it was eliminating six salaried positions and cutting senior management pay in a cost-saving move.

Revenue was $1.6 million on sales of 8,900 barrels, up 82 percent from last year's $875,000 on 4,900 barrels. The quarter was the first to fully reflect sales of the Wild Goose and Brimstone brands, which the company acquired in January.

The quarter included one-time, noncash charges of $1.1 million to cover the termination of a five-year contract with an investor relations firm and a loss on the sale of surplus equipment. Excluding the charges, the company's operating loss was $640,601, compared with $900,638 in the year-ago period.

The three-month period that ended June 30 was Frederick Brewery's 10th straight quarterly loss since it went public in March 1996 at $6 a share. Its stock closed yesterday at 93.75 cents, down 3.13 cents.

With an eye toward larger sales, Frederick Brewing has entered into a joint venture with C & L Brewing Co. of Washington to produce a new beer called Mojo Highway. The beer, which will be aimed at black consumers, is scheduled to be in area stores next month.

In another joint venture, the company will begin exporting its Hempen brand to Ontario Monday. In October, in what Frederick says is the largest of three deals, the company plans to produce a new beer brand that will be sold in China.

Chief Executive Kevin Brannon said expected sales gains from the current brands, seasonal beers and the new strategic alliances will help the company to at least break even by the end of the year.

"Our objective for 1998 was to do whatever was necessary to put this company on a sound financial footing and set the stage for further growth," he said. "It has taken longer than we would have wanted, but I firmly believe we will achieve our goal."

Pub Date: 8/07/98

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