Lark’s Legacy Asset Write-Off and Tax Adjustments Shadow Strong Sales Growth
Lark Distilling Co. reported a robust 12% increase in FY25 net sales to $15.6 million, underpinned by a completed brand restage and a major distillery upgrade at Pontville. Despite some export and B2B softness, the company’s strong cash position and strategic investments position it well for growth.
- FY25 net sales rose 12% to $15.6 million with four consecutive quarters of growth
- Brand restage completed, new product range ready for export shipment in Q1 FY26
- Pontville distillery redevelopment finished, consolidating production capacity
- Strong cash balance of $23.1 million and undrawn $5 million bank facility
- FY25 financials to include $1.3 million government grant income and non-cash asset write-offs
A Year of Transformation and Growth
Lark Distilling Co. Ltd (ASX, LRK) has closed FY25 on a high note, delivering a 12% increase in net sales revenue to $15.6 million. This marks the fourth consecutive quarter of sales growth, a notable achievement in a market still adjusting from the pandemic-induced volatility of recent years. The growth was primarily driven by direct-to-consumer (D2C) channels and global travel retail (GTR), with the latter maintaining steady performance in Australian airports.
While domestic business-to-business (B2B) and direct export sales saw slight declines, these were offset by strategic changes including the integration of Spirits Platform’s distribution margin and cost savings from streamlining the domestic sales team. The partnership with Spirits Platform has expanded Lark’s commercial reach, exemplified by the KURIO brand now available in over 650 independent outlets alongside national chains.
Brand Restage and Facility Upgrade Set the Stage for FY26
FY25 was also pivotal for Lark’s brand evolution. The company completed a comprehensive restage of its portfolio, positioning the brand for the next growth phase. The refreshed product range is slated for export market shipment in the first quarter of FY26, with a domestic rollout planned for the second half of the year. Early engagement with Asian distributors and key trade partners has been met with enthusiasm, signaling strong support for the new brand direction.
Operationally, the redevelopment of the Pontville distillery is largely complete. This consolidation brings distilling, coopering, maturing, blending, finishing, bottling, tourism, and back-office functions onto a single site, future-proofing production capacity. The upgraded facility is designed to support Lark’s scaling ambitions and enhance operational efficiencies.
Financial Discipline and Accounting Adjustments
Despite a modest net cash outflow from operating activities of $0.3 million in Q4, Lark maintains a robust cash position with $23.1 million in cash and term deposits, alongside an undrawn $5 million bank facility. Investing activities included $0.6 million in property, plant, and equipment expenditures related to Pontville’s development.
Looking ahead to FY25 financial reporting, Lark expects to recognise $1.3 million in government grant income from the Modern Manufacturing Initiative, reflecting successful compliance with grant conditions. However, the company will also record a non-cash fixed asset write-off of up to $1 million related to legacy assets from the Cambridge site, and derecognise a $5.2 million deferred tax asset due to its current loss-making status. These accounting adjustments, while impacting reported earnings, do not affect operational cash flow or strategic direction.
Outlook and Market Position
CEO Sash Sharma emphasised the company’s confidence in its trajectory, highlighting the strong sales momentum and the strategic foundation laid by the brand restage and facility upgrade. With a whisky inventory bank of 2.5 million litres and positive trade partner engagement, Lark is well positioned to capitalise on growth opportunities in both domestic and international markets.
As Lark prepares for its FY25 Results Investor Briefing in August, the market will be watching closely to see how the brand restage translates into sales performance and how the company navigates the evolving competitive landscape in premium spirits.
Bottom Line?
Lark’s FY25 achievements set a promising stage, but the real test lies in executing its refreshed brand strategy and scaling production in FY26.
Questions in the middle?
- How will the new brand restage impact domestic market sales upon rollout?
- What are the growth prospects and challenges in Lark’s export markets, especially Asia?
- How will the non-cash accounting adjustments influence investor perception ahead of FY25 results?
