By James Atkinson
Gage Roads Brewing has written off the equivalent of 140,000 cartons of beer due to a processing fault in its new brewhouse.
The West Australian brewer this week informed the ASX that the fault occurred during the commissioning of some remaining components of the new facility.
"Whilst the cause of the fault has been identified and corrective action is being taken, products manufactured during the period have not met the company’s strict quality assurance standards and will not be released to market," Gage Roads said.
"The impact is expected to be the loss of approximately 140,000 cartons, representing $1.12 million in gross profit, and with corresponding fixed expenditure unlikely to be recovered, this loss of gross profit will directly impact earnings in the second half of FY14."
Managing director John Hoedemaker assured the market that while the disruption and earnings impact was disappointing, it would only have a short term impact.
"Our strong sales growth, customer relationships and long-term objectives of the company are on track," he said.
Gage Roads increased third quarter revenue by 39 per cent on the previous corresponding period to to $23 million.
The company said it was in the process of re-branding its proprietary products, with the new inventory expected to be available on shelves in September 2014.
"The refreshed craft portfolio including three new products has received positive initial feedback from our industry partners," Gage Roads said.
"The new craft range, including our best-sellers Atomic Pale Ale and Sleeping Giant IPA is expected to increase sales and position Gage Roads as a key player in the growing craft beer market."
"Gage Premium Lager and Wahoo will be re-designed and re-positioned to correct their current decline, which is the largest contributor to an 18 per cent decrease in overall sales in comparison to the prior year-to-date period," the company said.