NLC today released its financial and operational results for the fourth quarter of fiscal year 2023 ended April 1, 2023. All information is unaudited.
NLC reported net earnings for the quarter of $39.9 million, an increase of $5.4 million, or 15.8%, compared with Q4 of fiscal year 2022. Net earnings for fiscal year 2023 total $201.2 million, an increase of $0.4 million or 0.2% from the prior year. The dividend paid by NLC to the Government of Newfoundland and Labrador totalled $40.0 million for the quarter, $1.8 million higher than Q4 of the prior year. This brings the dividend remitted for the fiscal year to $208.0 million, $2.0 million lower than the same period one year ago. The difference is due to many factors, namely the new collective agreement and an increase in commissions to support licensed cannabis retailers, as well as increased freight and security costs during the year.
For fiscal year 2023, alcohol and cannabis sales totalled $349.3 million compared to $318.9 million for the prior year, which in part reflected a change in reporting of cannabis sales.
The end of the 2022-23 fiscal year also marks the end of the three-year planning period for the 2020-2023 Business Plan. During this period, NLC reported record sales and earnings in each of the three years. The dividend paid by NLC to Government for the three-year period totalled $613.0 million, an increase of $80.9 million over the previous three-year period.
“I’m extremely proud of the NLC team for their continued commitment to serving Newfoundlanders and Labradorians,” said Bruce Keating, NLC President and CEO. “We’re proud to have contributed $208.0 million to fund valuable programs and services in communities across the Province. As importantly, we have continued to take important steps with respect to enhancing the customer experience, our regulatory mandate, corporate governance, and corporate social responsibility, as well as diversity, inclusion and belonging. As an employer to more than 600 NLC team members, we will continue to work towards earning trust in everything we do and strive to become the kind of organization we believe NLC can be.”
Beverage Alcohol sales for Q4 were $55.5 million, up 1.7%, mainly due to higher spirits, beer and ready-to-drink (RTD) sales. Compared with Q4 of 2022, spirits sales were up 2.7%, wine sales were down 6.3%, RTD sales increased 23.3%, and beer sold through NLC corporate stores increased 1.2%.
Sales overall were up 1.9% in fiscal year 2023 over fiscal year 2022, to $299.1 million, with an increase in all product categories. Spirits sales were up 0.3%, wine sales increased 0.4%, RTD sales were up 6.4%, and beer sales increased by 6.0% compared with the prior year.
Sales through NLC’s corporate stores were down 3.5%, while Liquor Express outlets across the Province experienced an increase of 4.7% over Q4 of the prior year. Sales through NLC’s corporate stores were up 0.5% for fiscal year 2023 vs. 2022, while Liquor Express outlets across the Province were consistent with prior year.
NLC also earns commissions on the sale of beer through Brewers’ Agents. These commissions for the quarter totalled $16.4 million, up 35.7% over Q4 of fiscal year 2022, mainly due to timing of beer shipments. For fiscal year 2023, commissions were down 0.2% for the year, for a total of $68.1 million.
Cannabis sales through Licensed Cannabis Retailers (LCRs) totalled $18.6 million in Q4, an increase of 22.3% over Q4 of the prior year. Total retail cannabis sales in Q4, including online sales, were $18.7 million.
Total retail cannabis sales for fiscal year 2023 increased by 15.8% over the prior year to $70.7 million. NLC also incurred an increase of 44.1% in cannabis operating and administrative expenses through the fiscal year. This is primarily due to an increase in commissions paid to Tier 1 LCRs, due to higher sales volumes and an increase in the commission rate paid from 15% to 20% to these LCRs.
Rock Spirits produced 93,000 cases of spirits and 3,000 cases of RTDs during Q4, a decrease of 2% in spirits and a consistent quantity in RTDs over the same period the previous year. During the 2023 fiscal year, Rock Spirits produced a total of 345,000 cases of spirits and 33,000 cases of RTDs, a decrease of 1.4% and increase of 175% respectively over fiscal year 2022. The increase in RTDs was driven primarily by growth of its partner brands as well as new canning projects.
Rock Spirits continued to collaborate with partners during the fiscal year, working with Labatt, the Newfoundland Cider Company, YellowBelly Brewery and Georges St. Pierre’s Pur Sang Vodka. It also added an RTD to its own portfolio, with the introduction of Screech Sangria. Rock Spirits will continue to seek out local and international partnership opportunities moving forward.
NLC conducted 1,484 inspections on liquor establishments and cannabis retailers in Q4, as it continues to work closely with the licensee community. This represents a 42% increase over the number of inspections conducted during the same period in fiscal year 2022.
This increase is primarily due to the pandemic challenges and establishment closures experienced in Q4 of 2022. During the fiscal year, NLC conducted 4,468 inspections on liquor establishments and cannabis retailers, up slightly over the prior year by 1%. In fiscal year 2023, NLC worked with its partners in local law enforcement and Canada Post to investigate 18 files resulting in seizures of 409 kg of cannabis products with a market value of $4.0 million. Since legalization in October 2018, NLC’s Regulatory Compliance and Enforcement team has seized approximately $10.0 million in illegal cannabis products. NLC is committed to providing systematic and thorough regulatory oversight that helps ensure public safety and provides a safe and secure supply of cannabis to the Province.
NLC continues to follow through on its corporate social responsibility commitment through various initiatives. In Q4 of 2023, staff representatives participated in the Evidence to Policy Symposium: Coming Together to Foster Safe Cannabis Use, hosted by Cannabis Health Evaluation and Research Partnership. NLC also promoted its Don’t Drink and Ride awareness campaign via radio and social media. It will continue to seek out strategic partnerships with law enforcement and the broader community to ensure its messages related to responsible choices are delivered to the public.
In March, NLC employees donated to five local charities as part of their annual Casual Day fundraising campaign: Canadian Mental Health Foundation NL, Kids Eat Smart Foundation NL, Ronald McDonald House Charities NL, Iris Kirby House, and the Gathering Place.
To further its commitment to the health and well-being of its employees, as well as its efforts in Diversity, Inclusion and Belonging, NLC completed the following initiatives in Q4 in addition to numerous diversity-related activities throughout the fiscal year:
Participation in Bell Let's Talk Day, Pink Shirt Day, Be Cool for Autism, and Black History Month through internal and social media campaigns.
Recognition of International Women's Day in March, highlighting prominent women in the industry via social media.
International Transgender Day of Visibility – Implementation of mandatory staff training on Inclusivity.
NLC is a Crown Corporation of the Government of Newfoundland and Labrador with responsibility through the Liquor Corporation Act, the Liquor Control Act, and the Cannabis Control Act for the importation, sale, distribution and management of beverage alcohol and cannabis, and for the delivery of programs that promote safe, responsible consumption of alcohol and cannabis.
NLC is one of the largest retailers in the Province. Through 29 corporate retail locations, over 140 agency stores, more than 600 Brewer’s Agent outlets, and over 1,400 restaurants, lounges and other licensees, along with private order services, NLC offers over 4,000 products per year to consumers and its retail partners from more than 20 countries. It also regulates and distributes to over 40 licensed cannabis retailers across the Province, and offers customers a secure, legal online environment for cannabis purchases via ShopCannabisNL.com.
NLC operates a 77,000 square foot distribution centre, as well as a manufacturing operation, Rock Spirits. The facility, which runs world-class blending, bottling and canning operations, ships to more than 30 countries around the world and has been in operation for over 65 years. NLC operates with the expectation that it will generate revenue for the Government of Newfoundland and Labrador, with 100% of its profits reinvested in the Province to fund key public services. NLC aspires to build trust in everything it does - with customers, employees, retailers, commercial partners and communities, along with Government, to ensure a stronger Newfoundland and Labrador.