Monster Beverage misses estimates as higher costs whack margins
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Monster Beverage (NASDAQ:MNST) reported sales rose 6.2% in Q4 to $1.51B. Case sales fell 8.3% in Q4, while average net sales per case dropped to $8.91 from $9.25.
Sales for MNST's Strategic Brands segment increased 42%, while sales for the companyâs Monster Energy Drinks segment increased 2.6%.
Gross margin plunged to 51.8% of sales during the quarter from 53.9% a year ago. The decrease in gross profit as a percentage of sales was primarily the result of increased ingredient and other input costs, including secondary packaging materials and increased co-packing fees, geographical and product sales mix, and increased logistical costs. Pricing actions lessened those impacts.
Operating income came in at $390.0M vs. $354.7M a year ago. The increase in operating expenses was primarily due to increased warehousing and other logistical expenses, increased payroll expenses and increased general and administrative expenses.
Monster Beverage (MNST) said it believes some of the increased costs that were experienced in 2022 are likely to be transitory, although cost inflation, including increases in energy particularly in EMEA, ingredient and other input costs, as well as co-packing fees, remain challenging. More price increases are being phased in during the first half of 2023 by the beverage company. Of note, the innovation pipeline in both alcoholic and non-alcoholic beverages was called robust by MNST management.
No guidance was issued by Monster.
Shares of Monster Beverage (MNST) were flat in after-hours trading after shedding 0.55% during the regular session.
The Seeking Alpha Quant Rating on MNST is at Hold with low grades for valuation and growth pulling down the overall score.