Monster Beverage Corp., the largest U.S. energy drink maker by sales volume, fell the most in six months after Chief Executive Officer Rodney Sacks said sales growth in April slowed.
The shares fell 6.7 percent to $52.13 at 10:06 a.m. after earlier sliding as much as 11 percent for the biggest intraday decline since Nov. 8. The Corona, California-based company’s shares had risen 7.8 percent this year through the close of regular trading yesterday, compared with a 14 percent gain for the Standard & Poor’s 500 Index.
The U.S. energy-drink market has experienced a slowdown this year through April, in part due to negative publicity over their safety and caffeine content, Sacks said on a conference call yesterday, after the company reported its first-quarter results. Sales rose 5.7 percent in April over the previous year, less than the 39 percent jump posted in April 2012.
“Our products are safe based on both our and the industry’s long track record and the scientific evidence supporting the safety of our ingredients,” Sacks said on the call.
Net income declined 17 percent to $63.5 million, or 37 cents a share, from $76.1 million, or 41 cents, a year earlier, the company said yesterday in a statement. Sales rose 7.3 percent to $555 million. The average estimate of seven analysts surveyed by Bloomberg was $501.7 million in sales.
Monster said profit for the quarter was cut by $8.3 million from payments to terminate distributor agreements. It shifted some distribution rights to new partners and had to pay termination fees to the old distributors under their contracts, the company said.
The company will receive $8.2 million in payments from new partners that will be recognized as deferred revenue over 20 years.
Monster dropped distributors in New York and San Diego, Roger Pondel, a spokesman, said by telephone yesterday. Pondel said wholesalers tied to Anheuser-Busch InBev NV, which distributes almost half of Monster’s U.S. sales volume, picked up San Diego rights and lost New York.
The Food and Drug Administration said in November that it’s investigating whether energy drinks may cause harm when consumed in excess or by young people or those with pre-existing heart conditions. The agency may move to regulate the drinks’ use or labeling.
San Francisco City Attorney Dennis Herrera sued Monster on May 7 for allegedly improper marketing to minors. That came a week after Monster sued Herrera in federal court, claiming his investigations of the company violate free-speech rights and attempt to improperly regulate the caffeine content of its products.
Monster’s share have risen 7.8 percent this year through yesterday.
Coca-Cola Co., the world’s largest soft-drink maker, also distributes almost half of Monster’s U.S. volume.