Calgary-based Big Rock Brewery Inc. is undertaking some heavy cost-cutting after losing $1.4 million in the first half of this year.
Net income in the second quarter was $297,000 compared to net income of $240,000 for the same time period in 2018. Big Rock lost $147,000 in the first six months of 2018.
“Big Rock grew its gross revenues (11 per cent year-over-year) for the second consecutive quarter in 2019. However, given the persisting high beer taxes imposed on the Corporation by the Government of Alberta, our margins continue to be under significant pressure,” president & CEO Wayne Arsenault stated in a news release.
“As a result of this challenging and persisting regulatory environment in Alberta, the Corporation was forced to execute on a significant cost cutting plan in order to conserve cash.”
“The Corporation undertook significant cost cutting initiatives in the second quarter and has instituted a revised budget for the remainder of 2019 to conserve cash while we continue to face Alberta regulatory headwinds in the form of high beer taxes,” said Don Sewell, the company’s chief financial officer.
For the three months ended June 30, compared to the three months ended June 30, 2018, Big Rock increased gross revenue by $2 million (11 per cent) from $18.5 million to $20.5 million from $18.5 million. It reported net revenue of $13.3 million, compared to $13.5 million, on sales volumes of 48,900 hectolitres (“hl”), compared to 56,012 hl; reported earnings before interest, tax, depreciation and amortization of $0.3 million compared to $1.2 million;
For the six months ended June 30, compared to the six months ended June 30, 2018, Big Rock increased gross revenue by $2.7 million (nine per cent) to $34.1 million from $31.4 million; reported net revenue of $21.9 million, compared to $23 million, on sales volumes of 83,875 hl compared to 96,823 hl; reported negative EBITDA of $1.1 million compared to positive EBITDA of $1.5 million.
“The overall revenue impact of the increase in Big Rock’s beer tax in Alberta was approximately $2.5 million and $4.3 million for the three and six months ended June 30, 2019, respectively,” said the company.
Big Rock did not reveal what cost-cutting measures were taken.
“The Corporation continues to work with the Government of Alberta to amend the Alberta beer tax policy to a framework that would provide brewers in Alberta a predictable and sustainable regulatory environment that promotes growth in the province. Should the current beer tax environment persist, Big Rock will consider further cost cutting measures to ensure its profitability and growth,” it said.