Commonwealth Brewery Limited (CBL) saw its second quarter net revenue decline by almost 50 percent, and a loss of $3 million, due to COVID-19 and government’s subsequent emergency measures to stem the spread of the virus, the company said in its quarterly financial statements.
It said it will have to turn to an $8 million short term borrowing cushion.
According to the company, government’s temporary cessation of alcohol sales from March 19 to May 6, the “dramatic increase” in unemployed people, and the veritable stop in visitor arrivals gravely affected operating results, even as the company held on to staff and avoided redundancies.
“During the period of the community lockdown, CBL successfully transitioned the back office staff to remote working,” the company said in its statement.
“Following the resumption of alcohol sales in early May, CBL successfully utilized new routes to market leveraging our online store www.700winesandspirits.com with store to door delivery.”
CBL revealed that its second quarter net revenue as a result of COVID-19 lockdown measures and subsequent factors, declined by 47.8 percent year-on-year, while operating expenses declined by 30 percent.
Comparatively, the company said, there was a total comprehensive loss of $3 million, compared to the company’s gain of $4.12 million during the comparative quarter in 2019.
“Principally as a result of the 2nd 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 $3.16 million,” the statement said.
“The above second quarter results, and other short-term balance sheet adjustments, have necessitated an increase in short-term borrowing of $8 million, compared to the position at the end of the 1st quarter of the year. CBL also implemented other mitigating actions such as revising our credit terms and reducing the recurrent operational spend.”
CBL said it will continue to focus on top line sustainability and cost reduction, and maintaining its staff complement, salary levels, and benefits.
“The decrease to personnel costs in the 2nd quarter of 16.3 percent is due to management’s decision to forgo any 2021 bonus related to the 2020 financial year,” the company said.
“The impact of the COVID-19 pandemic and related measures taken by government to combat its spread, have resulted in unavoidable constraints on our operations and results. However, actions taken thus far are to ensure that CBL limits the longer-term impact to our business. Management is confident that CBL is poised to rebound and return to profitability once economic conditions permit.”