Sleeman profit rises 41 per cent in Q2

Profit for Canada's third-largest beermaker soared by 41 per cent in the second quarter, despite intense price competition from the buck-a-bottle discount brigade.

But Sleeman Breweries Ltd. said it has had to cut 20 per cent of its staff during the year, keep a tight lid on costs, build its volumes and do it all without compromising the quality of its beer at a time when it is negotiating with a potential buyer.

"As the figures today show, we've delivered on all three of [our] strategies in the second quarter," John Sleeman, chairman and chief executive officer, said in a conference call Thursday.

He said little about the potential sale of the company his family founded. But four bidders are believed to be checking the books.

Molson Coors Brewing Co. is believed to the lead bidder, but three other breweries are believed to be in the running. They include the makers of the Labatt, Grolsch and Sapporo brands.

Sleeman announced Thursday that profit rose 41 per cent to $3.5 million, or 21 cents a share, in the quarter ended June 30. But revenue was essentially flat, at $57.8 million.

"In setting the course for the future after a very challenging 2005, Sleeman implemented strategies to achieve strong core volume growth, contain costs of goods sold and significantly reduce [administrative] expenses," Sleeman said.

Sleeman said the company was able to cut costs by $3.4 million over the year while raising volume by seven per cent. Much of the volume growth came from eastern Canada and from the discount side of his business, the so-called value brands.

Looking to future

Now that costs are in line, Sleeman said he is working to boost revenue from both discount and premium beers, while keeping the focus on high-margin premium products.

One avenue is the newly introduced Sleeman Light, a product the company defines as "a smooth easy-drinking beer" that would appeal to people who prefer light beer.

Sleeman, based in Guelph, Ont., brews a wide range of beers, from the premium Sleeman and Upper Canada brands to low-cost, high-volume "value brands."

The company's shares fell six cents to $15.04 by the closeThursday on the Toronto Stock Exchange.