USA: Boston Beer Co. Inc. announces figures on profits

Boston Beer Co. Inc., maker of Samuel Adams beer and other alcoholic beverages, on May 10 said first-quarter profit plunged 54 percent as production, shipping and advertising costs increased.

The company earned $1.8 million, or 13 cents a share, compared with $4 million, or 27 cents a share last year. Revenue increased by 17 percent to $56.9 million from $48.7 million a year ago, buoyed by higher shipment volumes and price increases.

However, operating costs jumped 27 percent to $30.3 million. Advertising, promotional and selling expenses made up the bulk of the costs, rising 28 percent increase over the previous year.

Analysts polled by Thomson Financial expected higher earnings of 28 cents a share and revenue of $53.8 million. The company reaffirmed its full-year forecast for earnings in a range of $1.10 to $1.18, while analysts expect $1.09.

Boston Beer also said its production contract with Miller Brewing Co. will end Oct. 31, 2008.

In a statement, the company said it currently has enough production capacity through other contracts "at acceptable economics" but cautioned "there is no guarantee that the current economics can be maintained."

The company is considering taking production completely in house, which may require building a new brewery -- a move that could cost between $70 million and $90 million over two years.

The company spent $11 million on improvements in its Cincinnati Brewery last year and expects that facility to handle two-thirds of its production in 2006. The company also has a brewery in Boston.

Shares of Boston Beer closed down $1.07, or 3.9 percent lower, to $26.43 on the New York Stock Exchange