Monster Beverage reported quarterly sales of more than $1bn for the first time in its history, but the energy drinks company said higher costs for promotions and raw materials such as aluminium cans were weighing on some measures of profitability.
The California-based beverages company, behind assertively-named energy drinks such as Monster, Relentless and Mutant, said net sales in its second fiscal quarter ended June 30 rose 12 per cent from a year ago to $1.02bn, which was roughly in line with the mean forecast among analysts surveyed by Thomson Reuters.
That number would be a few million dollars higher if not for a new accounting standard Monster recently adopted.
The company pointed out it was the first time quarterly sales had topped $1bn, with year-on-year growth of 14 per cent in its Monster energy drinks segment, which accounts for about 91 per cent of group revenue. Also buoyant were net sales to customers outside the US, which rose 18.5 per cent from a year ago to $293.8m.
Net income rose by about one-fifth from a year ago to $270.1m, or 48 cents a diluted share, which was roughly in line with market forecasts.
Gross profit of $620.3m was higher than a year ago, but the company pointed out that as a proportion of net sales it was down to 61.1 per cent from 64.3 per cent a year ago due to an increase in promotional allowances, costs related to the new accounting code, higher raw material and input costs, and its sales mix in its home market.
By volume, sales were up about 13 per cent from a year ago to 110.06m cases, but the average value of net sales per case dropped by 10 cents to $9.17.
Rodney Sacks, Monster’s chief executive, reiterated during an analyst call in June following its annual meeting that the company was “likely to increase pricing” for its drinks “probably before the end of the year” in an effort to counter rising prices for raw materials such as aluminium, sweeteners and freight costs.
Shares were down 0.9 per cent in after-hours trade on Wednesday.
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