Mighty Craft bullish despite losses
Infrastructure challenges and forced venue closures have resulted in increased losses at Mighty Craft, but the accelerator remains confident that growth will continue.
Revenue from ordinary activities for the year to June 2021 grew to $29.3 million, up from $9.2 million the year before, the company reported to the ASX today.
However consolidated losses after income tax reached just over $15.5 million, furthering the losses of $8.8 million reported last year.
Mighty Craft attributed these losses to COVID lockdowns, but also the cost of Mighty Craft infrastructure including its sales, marketing and management team, as well as the higher-than expected set-up costs of its national logistics network that will support Craft Hub, its cold store distribution project with Bevchain.
“As was the case last year, I would like to acknowledge that the group reported a group loss after tax of $15.5 million which is a result of the group investing in a new sophisticated online order, delivery and invoicing platform that does not yet have the scale to recover its greater than expected set-up costs,” acknowledged group chairman Robin Leveson.
“The distribution business and supply chain capability faced challenges and the fact that the venues were not able to trade at full capacity due to COVID-19 exacerbated this loss.”
It has also undertaken a number of capital raises throughout the year, earlier in 2021 raising $9.2 million through an institutional placement, as well as increasing its debt facility.
Tangible assets for the period decreased from $0.20 per share last year to $0.12 this year, and it has $4.3 million cash on hand.
In an investor presentation, Mighty Craft also said that it is withdrawing its guidance for FY22 due to “the unpredictable nature of ongoing closures and the uncertainty around the extent and duration of the COVID impacts on our business”.
Despite the ongoing COVID situation and lockdowns in Victoria and New South Wales, the company remained bullish.
“We see this impact as short term and continue to be very confident of the tailwinds in craft beverages through the recent acquisition of the Adelaide Hills Group,” Leveson continued.
“We are confident that the combination of our brands, our business model, and our people, will allow us to navigate the challenges ahead, realise opportunities and continue to grow the business successfully.”
Mighty Craft reportedly made 1.7 million litres of beer in the year, an increase of 60 per cent, according to the accelerator.
Growth in beer was driven by Jetty Road, Ballistic and Slipstream, Mighty Craft said.
Joint venture entities including Slipstream and Sauce Brewing Co. which both opened new or revamped venues during the year, as well as Sparkke, Poison Creek Distillery and Torquay Beverage Company, contributed a combined $147,338 loss to the company.
Spirits have been a major growth area for the business, and it launched its Seven Seasons brand in March 2021, as well as investing in an upgrade at Kangaroo Island Distillery which is now around 65 per cent complete.
“Mighty Craft has identified and responded to this challenge in consumer preferences by accelerating increasing supply, and expanding our range, of spirit and RTD offerings,” explained managing director Mark Haysman.
The group produced 96,181 bottles of spirits during the year, which it said was an increase of 290 per cent.
Mighty Craft has also launched a number of new products in the year including Nosh Boozy Seltzer, which has recently faced ABAC, and the zero-carb Better Beer, which it will contract brew at Australian Brewing Co and for which it raised $1.4 million.
The Mighty Craft (MCL) share price is up slightly on its opening price at $0.29, giving the business a market capitalisation at the time of writing of $85.5 million.