A mixed financial year for Might Craft comes on the back of an in-depth company review and several leadership changes, including the resignation of Mark Haysman, CEO and Managing Director, in July and Trevor O’Hoy from the Board of Directors just days before the FY23 presentation on August 29.
At the request of “several large shareholders”, Mighty Craft embarked on a Board-led, in-depth formal strategic review process across the entire business in May, releasing its findings on July 11.
Haysman announced his departure on July 3, and soon after, the Board appointed Jess Lyons as the Acting Chief Executive Officer, a position she still holds.
The key objectives adopted after the review was restructuring the company’s cost base in three phases, immediately reducing debt and optimising corporate structure.
Chris Malcolm, Chair of Mighty Craft, said: “During the last six weeks, Mighty Craft’s newly appointed Board and interim CEO has progressed its review of all aspects of the Company. It is very clear to us that the Mighty Craft business model requires urgent change.”
After joining the Board in April 2023, O’Hoy cited a lack of available time for his resignation. He said in a statement released on August 25: “Mighty Craft has some significant assets and brands in the stable, and I believe the strategic review could allow the company to unlock value for stakeholders, however, the company requires an extensive time commitment from all directors and right now I can’t commit the time required.”
FY23 highlights for the company include revenue of $82.5 million, +48 per cent versus the prior corresponding period (pcp), EBITDA from continuing operations of $17 million and total beer/cider volume sales of 13.3 million litres, an 83 per cent increase versus pcp.
Better Beer, in particular, performed well, with sales revenue reaching $45 million (+135 per cent versus pcp) and total volume sales of 10.4 million litres.
78 Degrees grew by 22 per cent, and Seven Seasons grew by 12 per cent, while the rest of Mighty Craft’s brands were, on average, broadly flat. These results were delivered against a backdrop of category declines in Craft Beer (-5.4 per cent) and Gin (-7.4 per cent).
Lyons said the team delivered strong growth in a “significant year of change” for the business, although earnings performance was below the expectations of the management team and Board.
“The Board-led strategic review announced to the ASX on May 25 outlined the key short-term priorities, notably reduce debt via an expanded divestment program and restructure the cost base. The Board and Management are working hard on the expanded divestment program and look forward to updating shareholder at the earliest convenience.
“As for the cost base, we’ve already made significant progress, removing nearly $5 million of cost during Q4 FY23, with further reductions slated for H1 FY24. I remain confident we are on the right track to stabilise the earnings profile of the Company and provide a clear path forward for all stakeholders,” she said.
Malcom concluded: “Mighty Craft is going through a significant period of restructuring to address number of issues within the business. As part of the strategic review the Board has listened to many key stakeholders and it is clear the business model needs to change.
We need to reduce debt and we need to reduce the cost base. In order to do this, we need to divest some larger assets. Once we are through this interim period and divestments are clearer, we will outline a path forward for the business.”
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