Molson Coors Brewing Co. (TAP, TAP.A.TO, TAP.B.TO) is slated to release its third-quarter results before the market opens Wednesday. 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. Analysts' estimates typically exclude special items. Net sales for the quarter are estimated to be $836.99 million, representing a 9.1% drop from last year.
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. 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. However, 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) 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. 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. Net sales for the period was down 55% to $798.9 million from $1.76 billion in the previous year. 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.
Molson Coors' joint venture with SABMiller, MillerCoors, which produces and markets the MillerCoors portfolio of brands in the U.S. and Puerto Rico, reported an increase in net profit for the second quarter, driven by revenue growth and lower costs. Net income rose to $304.9 million from $174.6 million in the same period last year. Underlying net income, excluding special items, increased 16.4% to $325.3 million from pro forma net income of $279.4 million in the prior year on strong revenue growth, cost management and continued synergy delivery. MillerCoors' quarterly net sales increased 1.6% to $2.14 billion from pro forma net sales of $2.10 billion last year.
Among peers, UK-based Diageo Plc (DEO,DGE.L) in mid October reported that its net sales for the first quarter ended September 30, 2009, declined 6% on an organic basis from the last year. Paul Walsh, Chief Executive of Diageo, then said, "As we anticipated consumer trends across our markets remain broadly unchanged since the year-end. Therefore net sales in the first quarter of the new financial year have been weak when compared to the strong performance of the first quarter last year. In the first quarter of last year stock levels increased. However this year, stock levels have not risen in the first quarter and in our biggest market, North America, stock levels in our US spirits distributor channel are below those held at 30 June 2009. The year has started as we thought it would and we reiterate our guidance for low single digit organic growth in operating profit in fiscal 2010."
Brazilian beverage company Companhia de Bebidas das Americas - AmBev (ABV) in August reported a 34.1% year-over-year growth in second-quarter profit, on IFRS basis, to R$1.376 billion, driven by double-digit growth in net sales on strong volume and pricing across its regions. On a per share basis, net income rose 33.6% to R$2.23. Normalized net income attributable to AmBev holders was R$1.391 billion, up 35.1% from last year, and normalized earnings per share increased 34.6% to R$2.26. Net sales climbed 13.5% to R$5.35 billion, and the sales growth was 8.8% organically, driven by 4% volume growth and price increases across its regions.
TAP closed Tuesday's regular trading session at $49.40, down $0.32 or 0.64%, on a volume of 1.34 million shares. In the past 52 weeks, shares have been trading in a broad range of $30.76 to $51.11.
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