Mighty Craft Limited (ASX:MCL) (Mighty Craft or the Company) is pleased to announce its FY21 results and provide an update on the outlook for FY22
FY22 Outlook – COVID Impact:
Given the state-based nature of lock downs and the speed at which they are enforced it is not possible for management to accurately estimate the impact of COVID on the business. As such outlining Mighty Craft’s exposure to COVID related lockdowns is deemed the most useful information for investors.
Mighty Craft’s venue exposure is outlined in Table 1 below, which illustrates the impact on each venue. There are five venues across Victoria and NSW and these are all closed at the time of this update (note: Jetty Road Lorne is shut through winter to upgrade the site, not due to COVID).
All venues have experienced disruption through late June, July and August due to either being locked down or at reduced capacity which impacts the ability to run the venue profitably given fixed cost structures. As mentioned, 34% of group revenue was forecast to come from direct venues and five of these are currently shut with the other three operating at reduced capacity.
Table 1: Venue exposure by state
The two charts below illustrate the breakdown of the business and also the forecast FY22 split of the wholesale business into on-premise and off-premise.
Chart 1: Total sales split by business Chart 2: Wholesale sales breakdown
Focus Areas through COVID and beyond:
Commercial focus areas – continue to execute growth strategy:
Capital management – unlocking balance sheet flexibility
Commenting on the FY22 outlook, Mighty Craft’s Managing Director Mark Haysman commented “This is no doubt a tough time for our retail venues and on-premise business which makes up roughly half of the group sales. The lack of certainty over the next 6 months due to the highly infectious Delta strain, makes it difficult to plan with confidence. We are laser focused on keeping our staff and customers safe, while diverting resources and funding towards off-premise growth initiatives and accelerating growth in D2C spirits sales. There is light at the end of the tunnel with the current trend in vaccination rates across the country, in that we will return to normal in the not-too-distant future and we will be in a position to capitalise on the resulting opportunities when this occurs. That said the early stages of integration with Adelaide Hills Group is progressing well, with the cultural alignment very strong, and we remain confident in our ability to execute despite the current challenges, and look forward to providing further updates to shareholders as we move through H1”