Lark Distilling Co: FY23 performance paints grim picture for Tasmanian whisky titan
Top Tasmanian whisky distiller Lark has expressed optimism for FY24 amid a new Asian pivot, after announcing a full-year loss of $5.1m. Here’s what the road ahead looks like for the company.
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Top Tasmanian whisky distillers Lark Distilling Co has conceded it faced a “challenging year,” headlined by soaring inflation, softening revenue and ongoing costs from former chief executive Geoff Bainbridge’s meth scandal.
According to Lark’s FY23 results, released to the Australian Stock Exchange late last week, the company made a full-year statutory loss of $5.1m, net sales were down $3.3m to $17m, and operating costs increased 29 per cent.
Lark’s loss from its ordinary activities – $4.9m – represented a 943.4 per cent increase on its loss from ordinary activities in FY22, which was just $470,398. The corresponding figure in FY21 was a profit of $3.44m.
Lark received $3.7m worth of government grants in FY23, to go with $4.5m it received the previous financial year.
However, there were a number of caveats to the soft numbers.
Taking out one-off, large transactions in FY22, the company said its organic net sales growth was in fact up 15 per cent, driven especially by massive growth in its core Signature and Symphony ranges.
Its increase in operating costs was due to the opening of two venues, The Still Lark Whisky Bar in Hobart and its new Pontville headquarters, and new hires in the marketing and e-commerce teams, the company said.
In addition, the company said its normalised statutory full-year loss – which strips out significant one-off costs that don’t fully reflect the company’s performance – was just $2m.
Chief among the significant costs was a $1.1m hit for “one-off staff and CEO recruitment costs, as well as restructuring costs”.
Mr Bainbridge, Lark’s former chief executive, resigned in disgrace last February after he was depicted on video smoking methamphetamine from a glass pipe.
Lark shares plummeted from $4.55 to a low of $3.26 in the wake of the scandal and have continued their slide since, currently trading at $1.55.
Despite the “challenging year for Lark in terms of headline financial results,” chief executive Satya ‘Sash’ Sharma, who was appointed on May 1, said the company was targeting “growth” in FY24, driven especially by its new Asian pivot.
Mr Sharma said Lark had recently appointed a new Asian Sales Director, Alfred Goh, and signed an exclusive MoU with Malaysian distributer Luen Heng.
This is in addition to Lark’s recent expansion into global travel retail (i.e. airport duty-free), with the whisky now stocked in “multiple Australian international airports”.
“We are only at the start of Lark’s export journey, with more exclusive distribution agreements to follow, in addition to the planned expansion of our recently launched global travel retail business,” Mr Sharma said.
“We are targeting growth from seeding the Lark brand in international markets from the second half of FY24.”
Lark chairman David Dearie said that the “most significant” factor in the company’s financial performance in FY23 was “one-off and opportunistic” transactions in FY22, which inflated the previous year’s numbers.
He noted that not all could be measured in dollars and cents – the company collected a “record” 56 gongs last year, including five at the prestigious Australian Whisky Awards in March.
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