Virgin Islands rum giant
swung to a fourth-quarter loss Tuesday, citing heavy promotional spending and hurricane-related losses.
For its fourth quarter ended Sept. 30, the West Palm Beach, Fla., spirits company lost $2.7 million, or 42 cents a share. That reverses the year-ago profit of $1.6 million, or 28 cents a share. Sales rose to $26.5 million from $24.8 million a year earlier.
"2004 was a significant investment year behind our Cruzan brand, and we anticipated losses in the premium brands business as the company spent heavily on brand promotion," said CEO Jay Maltby. "Our efforts were rewarded with net sales growth of Cruzan Rum for the year of 24.1%. Case sales of Cruzan Rum exceeded half a million cases, inclusive of sales originating from our U.S. Virgin Islands subsidiary. We expect to continue our strategies to invest in the premium brands segment, continue to aggressively grow sales and position the Cruzan brand to contribute significant earnings in future years."
But the company said its other operating segments performed below expectations, due in part to hurricane-related plant closings, power outages, shipment interruptions and incremental labor costs. Todhunter also said bulk alcohol sales were hurt by a slowdown in the high-margin citrus brandy and spirits lines, along with higher raw material and energy costs.
Responding to significant bottling sales declines during the last two fiscal years, Todhunter said it has explored other alternatives, including further consolidation of its two bottling plants, a partial sale and the shedding of less profitable product lines. "We have recently moved all bottling operations into our more efficient Auburndale, Fla., plant, with the exception of a profitable vinegar, cooking wine and juice bottling line, which will continue to operate in our Lake Alfred, Fla., facility," Todhunter said. "These actions should bring these segments back to their historical profitability."
On Tuesday, Todhunter shares failed to trade, a day after their $12.99 close Monday.