Boston Beer’s results less gloomy than expected

Investors were mildly encouraged by Boston Beer’s second quarter results to the end of June, which were less gloomy than expected and the shares put on about 6% in response.

The Samual Adams’ brewer’s retail sales fell by 4% and shipments to distributors were 6.4% lower in the quarter. Consequently, revenue fell by 4% to $614.2 million, which beat the consensus $597.3 million estimated by analysts

Boston said that demand improved during the quarter after a weak start in April. Gross margin increased 60 basis points to 46%.

However, profits per share fell from $4.72 last year to $4.39, which was well below the consensus prediction of $5.01.

Lowered guidance

The company lowered its volume guidance to account for softer performance in the industry and the timing of product launches, though it maintained its earnings-per-share guidance.

It predicts volumes for the rest of the year will be between flat and a decline in the low single digits but that earnings per share will achieve the previously forecast $7 to $11, slightly below consensus estimates.

Chairman Jim Koch noted an expanding gross margin and strong cash-flow generation, and said: “While the industry environment remains dynamic, we are seeing early signs of progress on innovation and will use our strong balance sheet to invest in our brands while returning cash to shareholders.”

No debt

One of the attractions of Boston is that it carries no debt. That has led to speculation that it could be a target for major brewers such as Heineken or Molson Coors seeking greater exposure to the seltzer market.

Suntory has denied it is interested but the unspecified takeover speculation continues to swirl around Wall Street.

The only proposal has come from Canadian cannabis group Green Thumb, which has asked the brewer to consider a merger to create a “powerhouse of brands”.

Green Thumb was set up in 2014 as a national consumer packaged goods company and retailer, selling a number of products including edibles and pre-rolled cannabis cigarettes. It also operates a number of dispensaries through its RISE brand across the US, totalling almost 100 by 2024.

No response has been made public.

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