By NEIL HARTNELL
Tribune Business Editor
Commonwealth Brewery has disclosed that the COVID-19-related bar on alcohol sales slashed its 2020 second quarter revenues by 48 percent year-over-year, dropping it to a $3.16m first half net loss.
The vertically-integrated brewer, distributor and retailer, unveiling its results for the six months to end-June, revealed that the initial COVID-19 lockdown dropped its first-half revenue by 30.5 percent compared to prior year comparatives due to the near-two month halt to sales from its core business.
The BISX-listed entity, which is 75 percent majority owned by international beer giant, Heineken, added that it had to “leverage” its strong balance sheet to borrow $8m that it used to maintain full staff salaries and benefits during the period when its operations were shut down.
Commonwealth Brewery said in the results statement, which was released as The Bahamas goes into a second COVID-19 lockdown that will now impact its third quarter and second half performance, that it remains confident it “is poised to rebound and return to profitability once economic conditions permit”.
“The COVID-19 pandemic has had a significant impact on Commonwealth Brewery’s operations in the second quarter of 2020,” the Kalik manufacturer told shareholders and the Bahamian capital markets.
“The temporary cessation by government of alcohol sales between March 19 and May 6, the dramatic increase in unemployment and the virtual halt in tourist arrivals severely reduced operating results and required that our business continuously adjust to the diverse challenges posed.”
Commonwealth Brewery added: “Net revenue during the second quarter declined by 47.8 percent, while operating expenses reduced by 30 percent. As a result, a total comprehensive loss of $3m was realised, compared to a positive result of $4.12m during the corresponding period of 2019.
“Principally as a result of the second quarter’s operations, net revenue for the first half of 2020 declined by 30.5 percent, and the net loss for the first six months of the year was $3.16m.” The BISX-listed brewer’s sales dropped from $34.94m in the three months to end-June 2019 to just $18.217m this time around, chiefly due to the COVID-19 lockdown and related alcohol ban.
As a result, Commonwealth Brewery suffered a more than $7m reversal on its bottom line, which dropped from $4.122m profit in the 2019 second quarter to a $3.005m loss this time around. The same pattern was repeated for the half-year, with revenues slumping from $67.223m to $46.887m, and a $3.255m profit in the 2019 first half becoming a $3.156m net loss this year.
Turning to the balance sheet consequences, Commonwealth Brewery said the financial results and other “short-term adjustments” caused “an increase in short-term borrowing of $8m compared to the position at the end of the first quarter of the year. Commonwealth Brewery also implemented other mitigating actions such as revising our credit terms and reducing the recurrent operational spend.
“Commonwealth Brewery will continue its focus on top-line sustainability and cost reduction,” the company added. “During this period of uncertainty, Commonwealth Brewery has maintained its current staff complement prior to the lockdown and maintained salary levels and full staff benefits by the above leveraging of its financial position.
“The decrease to personnel costs in the second quarter of 16.3 percent is due to management’s decision to forgo any 2021 bonus related to the 2020 financial year.... During the period of the community lockdown, Commonwealth Brewery successfully transitioned the back office staff to remote working.
“Following the resumption of alcohol sales in early May, Commonwealth Brewery successfully utilised new routes to market leveraging our online store www.700winesandspirits.com with store to door delivery.”