Currency drop helps stem liquor company losses

The recent sharp decline in the dollar has significantly cut losses of listed liquor company 42 Below for the March year, the company says.

Detailed results will not be made public till next month, but one market source suggested the ebitda loss will now be slightly less than $3 million.

That compares with last September's projection of a loss between $3.5 million and $3.8 million.

"Our life has been basically with the exchange rate at US70c, so ... when it hit US65c we were very happy," chief executive Geoff Ross said yesterday.

"It does make a huge difference and, just in the last month, it's really stepped down."

In September, 42 Below anticipated revenue of between $14.8 million and $16.2 million.

It said yesterday sales had been in line with this guidance but the loss would be "markedly lower than the bottom of the guidance range due to the recent rapid decline of the New Zealand dollar".

The company said more than half 42 Below's income was derived from export sales paid for in foreign currency. "If the weakening of the New Zealand dollar had not occurred, ebitda would have been within the guidance given," the company said.

Export growth was expected to continue.

That meant a lower kiwi at current levels or less - especially against the US dollar - would have a positive impact on profits in the coming financial year.