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Molson Coors Brewing Q4 Profit Drops; Stock Down

Molson Coors Brewing Company (TAP, TPX.TO) reported that net income attributable to MCBC totaled $76.0 million for the fourth quarter compared to $716.9 million in the prior year, primarily driven by the one-time income tax benefit recognized in the prior year due to the reduction to the U.S. federal corporate income tax rate as a result of U.S. tax reform.

The decline was also hurt by unrealized mark-to-market changes on commodity positions and lower volume and cost inflation in the U.S. and Canada, partially offset by positive global net pricing, volume growth and base business performance in Europe and International, global marketing optimization, general and administrative spend reductions and cost savings, as well as lower interest expense.

In Tuesday pre-Market trade, TAP is trading at $61.00, down $4.37 or 6.69 percent.

Underlying net income per share grew to $0.84 from $0.62 last year.

Underlying net income increased 35.7 percent, driven by positive global net pricing, brand volume growth and base business performance in Europe and International, global marketing optimization, general and administrative spend reductions, cost savings, lower interest expense and lower income tax expense, partially offset by lower volume and cost inflation in the U.S. and Canada.

Net sales were $2.419 billion, decreased 6.2 percent and 5.0 percent in constant currency due to lower volume in the U.S. and Canada, partially offset by higher net pricing.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.79 per share and revenues of $2.55 billion. Analysts' estimates typically exclude special items.

Worldwide brand volume of 22.0 million hectoliters decreased 1.5 percent, due to lower volume in the U.S. and Canada, partially offset by growth in Europe and International. Financial volume of 21.6 million hectoliters decreased 6.5 percent, driven by lower volume in the U.S., in part due to quarterly timing of wholesaler inventories, as well as lower volume in Canada and International, partially offset by growth in Europe. Global priority brand volume decreased 1.7 percent.

The company said it is focused on further strong free cash flow delivery and deleverage supported by more than $200 million of cost savings in 2019 and further $450 million across 2020 - 2022.

The company remains committed to plan to reinstitute a dividend payout-ratio in the range of 20-25% of annual trailing underlying EBITDA upon achieving 3.75x leverage, which it expects to occur around the middle of 2019.

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