Moa says earnings will still be positive despite downgrade

Moa expects ebitda will come in between $1 million and $1.5m for the year ending March. Photo / Supplied

Beer and cider maker Moa Group has downgraded its forecast annual operating profit although it still expects to post its first ever positive earnings before interest, tax, depreciation and amortisation result, thanks to its newly acquired hospitality venues.

Now, the company expects ebitda will come in between $1 million and $1.5m for the year ending March.

In September, the company reiterated its expectation made when it bought the Savour Group hospitality chain in April last year that annual ebitda would be $3.6m.

Today, executive chair Geoff Ross said revenue is on track to be more than $40m for the year but that the beverages business is having a slower turnaround and that it is taking longer to integrate the hospitality business, driving up overhead and administration charges.

Excluding head office and administration costs, the venues are expected to deliver ebitda between $4.5m and $5m.

Combined administration and overheads costs are expected to be about $2.5m for the year.

"Having made a strategic decision to vertically integrate Moa Group and invest in a leading hospitality group, we are pleased to report we are able to post Moa's first profitable year and we see this position improving," Ross said in a statement.

"Our results underscore the strength of our strategy to expand into the hospitality sector and the group is actively looking to build on its success in the hospitality sector through further well-qualified acquisitions over the course of 2020," he said.

Moa bought the Auckland Italian restaurant, Non Solo Pizza, in September and opened an American-style restaurant at Auckland's fish market, Lobster and Tap just before Christmas.

"With respect to the brewing business, strong in-roads have been made and management will continue to be focused on innovation, integrating the teams and the rationalisation of overhead costs," Ross said.

The company said the beverages division's margins are improving "although the impact of these are flowing through later in the year than anticipated."

Product launches recently include Vogel's beer – a beer that's supposed to taste like Vogel's bread – and lower calorie lager.

Moa shares are trading at 25 cents, 1 cent lower than yesterday, and have fallen 33.4 per cent in the last 12 months. They were floated in 2012 at $1.25 per share.

Ross said the coronavirus has had "minimal" impact on the business but it will continue to monitor the situation closely.