|
 |  MarketWatch -
Nov-04-2009Cost cuts, tax gains boost Molson Coors(topic overview)
CONTENTS:
SOURCES
FIND OUT MORE ON THIS SUBJECT
The trends seem to improve with easing economic pressures. As per certain reports, the company's U.S. business has not been as hurt as that in Canada, as it has the benefit of its MillerCoors LLC, the joint venture between Molson Coors and SABMiller Plc's (SAB.L: News ) U.S. unit, which is expected to generate some $500 million in savings in three years. In its preceding second quarter, Molson Coors had reported a profit that more than doubled to $187.3 million or $1.01 per share, from $79.4 million or $0.42 per share last year, helped by higher beer pricing and cost reduction initiatives across the company. This more than offset the effects of a strong U.S. dollar, cost inflation and lower worldwide sales volume. [1] LONDON, Nov 4 (Reuters) - MillerCoors, the second-largest brewer in the United States, on Wednesday reported a 28.1 percent rise in third-quarter net income as it found an extra $200 million of cost savings resulting from its 2008 merger. The combined U.S. operations of SABMiller Plc ( SAB.L ) and Molson Coors Brewing Co ( TAP.N ) with brands such as Miller Lite and Coors Light, said underlying net income in the quarter was $244.4 million with net sales up 3.1 percent to $2.01 billion in the July-September quarter. The company, formed in July 2008, had said it would make $500 million of annual cost savings by the end of the third year of its combined operations, but now expects to make an extra $200 million by the end of 2012, to give a total of $700 million of savings over the first 4-1/2 years of its merger.[2] The prior-year quarter total sales were $1.37 billion and net sales were $921.1 million. While announcing the second quarter results back in August, Peter Swinburn, president and chief executive officer of Molson Coors, said, "While we expect the balance of 2009 to present challenges in the areas of competitive price discounting in Canada and cost inflation across our company, we are addressing these issues by staying focused on building strong brands, reducing costs, generating cash, and driving shareholder value." Molson Coors, which was formerly known as Adolph Coors Co., brews, markets, sells, and distributes beer and other beverages through its subsidiaries, under a portfolio of leading premium quality brands such as Coors Light, Molson Canadian, Molson Dry, Carling, Coors Banquet and Keystone Light in North America, Europe and Asia. The distribution of its products in U.S. is through a three-tier system consisting of manufacturers, distributors, and retailers, and in UK is through a two-tier system consisting of manufacturers and retailers. It has a joint venture with Grupo Modelo, S.A.B. de C.V. in Canada, and with Royal Grolsch N.V. in the United Kingdom and the Republic of Ireland. The recession-hit economy had seen consumers shifting their habits of drinking beers, leading to volume drops for key Molson Coors markets like Canada.[1] Like all discretionary consumer products, sales of beer have been impacted by the slowdown in consumer spending. Its relatively low price has made it more resilient than other products. The world's third-largest brewer has been promoting its brands, such as Coors Light and Molson Canadian, raising prices and keeping a tight lid on costs to offset a dip in volume and unfavorable foreign currency fluctuations. Molson Coors plans spend more to promote its beers in its Canadian, U.S. and international businesses in the current fourth quarter, President and Chief Executive Peter Swinburn said in a statement.[3]
Molson Coors has been focusing on products in Britain where it can make more money, and shedding less profitable ones. Even facing declining volumes, Molson Coors and other major brewers have been raising prices, saying they must cover their rising costs for key ingredients used to make and transport their beer. In the U.S., where the company makes and markets its beers with former rival SABMiller's U.S. unit, net revenue per barrel increased 3.7 percent, driven by price increases the company took last fall and reductions in discounting.[4]
Sales to retailers there dropped 1.3 percent. Profits are rising because the company is benefiting from the price increases and cost controls within its business. It recognized some $31 million in savings in the third quarter due to the MillerCoors joint venture with SABMiller's U.S. unit, which makes brands like Miller Lite.[4] DENVER — MillerCoors, a U.S. joint venture between Molson Coors Brewing Co. and SABMiller PLC, said Wednesday that its third-quarter profit climbed on cost-control efforts as well as the strength of beer brands like MGD 64. The maker of Blue Moon and Miller Genuine Draft said its earnings rose 37 percent to $229.7 million compared with a pro-forma profit of $168.2 million a year ago.[5]
Higher beer prices helped MillerCoors, the U.S. brewing venture of SABMiller and Molson Coors, to increase net sales in the third quarter of 2009, with the group also reporting a double digit rise in profits.[6]
CHICAGO (Reuters) - Molson Coors Brewing Co ( TAP.N ) reported a bigger-than-expected rise in quarterly profit, helped by cost cuts and price increases, but volumes fell as the beer industry sees a slowdown in consumer spending.[3] MILWAUKEE — Brewer Molson Coors said Wednesday its third-quarter profit rose 37 percent as consumers bought less of the company's beer but paid higher prices for it. Molson Coors said it generally raised prices across its major markets but discounted some prices to compete. It also credited better cost controls for the increase in profit.[4]
MillerCoors LLC's third-quarter profit rose 37% as cost cuts and strengthened sales of the company's cheaper beers helped buoy the brewer's profits. MillerCoors said volumes in its below-premium portfolio increased, helping offset declines from its more expensive beers.[7] "We are delivering our synergies, controlling costs and managing revenue for sustainable profit growth," said MillerCoors CEO Leo Kiely. "In this challenging economic environment, we're also realising the benefit of a well balanced portfolio that offers consumers choice and variety in all segments." MillerCoors raised its syergy target for 2009 to $270m, against an original forecast of $225m For the first nine months of the year, net sales rose to $5.86bn, from $5.7bn last year.[6] Molson Coors' net sales slipped to US$853.7 m for the quarter, against $921m last year.[8] Net sales at Molson Coors Brewing Co. fell 7.3 percent to $853.7 million in the quarter.[4] At Molson Coors, sales excluding excise taxes fell 7.3 percent to $853.7 million, ahead of analysts' forecast of $837 million.[3]
Shares of Molson Coors fell 3 percent. Carlsberg beat analysts' profit expectations on Wednesday but trimmed its 2009 sales outlook and forecast an "equally challenging" 2010, and its shares fell 5.4 percent.[9]
Worldwide the volume of beer sold fell 2.9 percent. Consumer habits have shifted in at least the past year due to the recession — leading to volume drops for key Molson Coors markets like Canada and Britain, both outpacing industry trends there in the third quarter.[4] Molson Coors, the Canada-based brewer, has reported double digit growth in net earnings in the third quarter of 2009. Net earnings for the three months to the end of September rose by 37% to US$235.3 m, up from $171.3m in the same period of 2008 and boosted by both synergies and improved profitability in the brewer's UK business, Molson Coors said today (4 November).[8] Molson Coors CEO Peter Swinburn said: "Molson Coors had a successful third quarter, with underlying earnings up more than 22% versus a year ago. "This headline profit includes some non-operating and one-time noise, both positive and negative. Excluding these factors, earnings grew approximately 13% in the quarter."[8]
For the first nine months of the year, Molson Coors net earnings rose to $498m, compared to $285m last year.[8] Molson Coors Brewing Co.' s third-quarter earnings rose 37% amid a derivative gain, cost cuts and a sharply lower tax rate. The brewing industry has seen sales soften as consumers cut back their spending habits.[10]
Sales from wholesalers to retailers -- a better gauge of consumer demand -- fell 1.3 percent. The MillerCoors venture blamed a low single-digit decline in sales volume of its premium light beers, including Miller Lite and Coors Light, and a double-digit decline of its higher-end brands, which include Miller Chill and Killian's Irish Red.[3] Sales of Coors Light, by volume, fell slightly after the brand saw strong growth a year earlier.[3]
Earlier on Wednesday, MillerCoors reported a 28.1 percent increase in net income, as cost savings and price increases offset a dip in sales volume. [3] The company credited the improved performance to price increases implemented in the fall of 2008 and less discounting. MillerCoors, which is based in Denver, was also helped by its cost-control efforts, which included a 4.5 percent decline in marketing, general and administrative costs.[5]
Revenue grew 3 percent to $2.01 billion from $1.95 billion, partly on MGD 64's strength, while sales of mainstay Miller Lite continued to soften. MillerCoors said its pricing remained solid, with domestic net revenue per barrel up 3.7 percent when removing contract brewing and company-owned distributor sales. [5] Net sales for the quarter are estimated to be $836.99 million, representing a 9.1% drop from last year.[1] Net sales for the three months to the end of September rose by 3% to US$2 bn, against an equivalent $1.95bn in the same period of last year.[6]
Net sales for the period was down 55% to $798.9 million from $1.76 billion in the previous year.[1]
In the same quarter a year ago, the Denver, Colorado-based brewer had reported net income of $173.2 million or $0.94 per share, income from continuing operations of $170.0 million or $0.92 per share, and underlying income of $175.8 million or $0.95 per share.[1] The brewer, whose other beers include Blue Moon, earned $235.3 million, or $1.26 per share, in the third quarter ended September 26, up from $171.3 million, or 92 cents per share, a year earlier.[3]
Underlying earnings climbed 20.6% to $205.4 million or $1.11 per share from $170.3 million or $0.92 per share a year ago.[1] On average, eight analysts surveyed by Thomson Reuters expect the company to post earnings of $0.98 per share for the quarter, with estimates ranging between $0.90 and $1.06 per share.[1] Adjusted earnings per share of $1.14 topped analysts' average forecast of 98 cents, according to Thomson Reuters I/B/E/S.[3]
In 1999, HP's stock was valued at $52 per share, but it had dropped to $21 per share by the time Fiorina was ousted in 2005.[11]
The Denver-based maker of Coors Light said it earned $235.3 million, or $1.26 a share, in the three months that ended in September.[4] MillerCoors said it saved $73 million in the third quarter in part by getting rid of duplicate and transitional positions and continuing to shift production of Coors and Miller brands to the larger MillerCoors brewery network. MillerCoors still has to deal with a tough economy that is making consumers limit their drinking and trips out to bars.[5] The pairing, which generated $73 million in cost savings in the third quarter, is expected to generate some $500 million in savings in three years.[4] The two sides joined up in the summer of 2008 to better compete against industry leader Anheuser-Busch, which later sold itself to Belgian-based InBev. The companies said MillerCOors now expects to reach $270 million in cost savings by the end of this year, beyond its original target of $225 million.[4]
The pairing of Molson Coors and SABMiller is also saving money by operating together and eliminating overlapping functions, a move it undertook starting in July 2008 to better compete against industry leader Anheuser-Busch, which sold itself last year to Belgian-based InBev. [5]
The results echoed reports by MillerCoors, Molson's U.S. joint venture with SABMiller Plc ( SAB.L ), and by Carlsberg ( CARLb.CO ), the fourth-biggest brewer.[3] Underlying net profits, excluding one-off items, increased by 28% to $244m for the quarter, said the brewer, adding that it achieved $73m in syergies from the joint venture deal during the quarter.[6]
Operating profits for the three months rose to $232m, against $171m last year.[6] Excluding pension related charges and other items, profit increased to $244.4 million from $190.8 million.[5] Analysts predicted the company would earn 98 cents a share on revenue of $837 million. Those estimates typically exclude one-time charges.[4] The company's lower beer volume reflected poor weather in key geographies, a weak global economy, and the company's strategy in the U.K. to emphasize revenue growth over low-margin volume growth.[1] Global beer sales by volume fell 3% for the quarter, to 13.8m hectolitres, due to tough global economic conditions and a strategy to put value over volume in the UK market, said the group.[8] Canada's sales volume fell 1.8 percent and while volume in Britain, where the company has market leader Carling, dropped 6.3 percent.[4]
Price rises helped the brewer to offset a dip in volume sales, to 18.4m barrels from 18.6m.[6]
MillerCoors' least expensive beers, including Keystone Light and Miller High Life, saw a low single-digit increase in sales.[3] Consumers also appear to be favoring less expensive brands like Keystone Light and Miller High Life during the recession, while pricier brands like Killian's Irish Red and Miller Chill experience lower sales.[5]
The small international markets segment saw volume jump 27.7 percent, driven by Coors Light in China and Carling in Europe. [3] Shares fell $1.68, or 3.4 percent, to $47.72 in morning trading Wednesday.[4] Shares in the group rose by 3% immediately following the announcement after earnings beat analysts' expectations.[8]
Existing users, please login at the top of the page. Summary: MillerCoors has said that the U.S. beer market is heading for decline in 2009, but the brewer highlighted progress for its premium light portfolio. [12]
SOURCES
1. RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises .
2. UPDATE 1-MillerCoors Q3 income up, finds extra cost savings | Stocks | Reuters
3. Molson Coors profit tops view, volume slips | Markets | Hot Stocks | Reuters
4. The Associated Press: Molson Coors 3Q profit rises 37 pct on price hikes
5. The Associated Press: MillerCoors 3Q profit up on cost-control efforts
6. US: MillerCoors reports Q3 profits, sales rise: Beverage News & Comment
7. MillerCoors 3Q Profit Jumps 37% On Cost Cuts; Sales Up 3.1% - WSJ.com
8. CANADA: Molson Coors profits up in Q3: Beverage News & Comment
9. UPDATE 2-Molson Coors profit tops view, volume slips | Industries | Consumer Products & Retail | Reuters
10. Molson Third-Quarter Coors Profit Rises 37% - WSJ.com
11. Former HP Executive Carly Fiorina Says She Is Running For Senate
12. Insight - US beer sector to shrink in '09 - MillerCoors: Beverage News & Comment
GENERATE A MULTI-SOURCE SUMMARY ON ANY SUBJECT
Enter your search query below. WAIT 10-20 sec for the new window to open.
Get more info on Cost cuts, tax gains boost Molson Coors by using the iResearch Reporter tool from Power Text Solutions.
 |
|  |
|
