Beer brewer Molson Coors Brewing Co.(TAP,TAP.A.TO,TAP.B.TO ), on Wednesday reported a 37.4% rise in profit for the third quarter, driven by lower tax rate, higher beer pricing and cost control measures across the company that more than offset a decline in revenues from last year.
Meanwhile, Molson Coors and SABMiller plc (SAB.L ) announced third-quarter results for their joint venture, MillerCoors, where underlying net income rose 28.1% from last year, helped by lower costs. Revenues grew 3% from last year on domestic net pricing, despite continued commodity cost pressures.
The recession-hit economy is witness to consumers shifting their beer drinking habits, leading to volume drops for key Molson Coors markets like Canada, but the trend seem to be improving with easing economic pressures. As per reports, the company's U.S. business has not been hurt as much as it did in Canada, due to the benefit of its MillerCoors LLC, which is expected to generate some $500 million in savings over three years.
For the third quarter, the Denver, Colorado-based brewer's net income attributable to Molson Coors rose to $235.3 million or $1.26 per share from $171.3 million or $0.92 per share in the year ago quarter.
Income from continuing operations attributable to Molson Coors for the quarter rose to $244.3 million or $1.31 per share from $168.1 million or $0.90 per share in the year ago quarter.
Results for the quarter included net special charges of $4.3 million pretax, composed primarily of $3.5 million non-cash expenses associated with closing the Edmonton Brewery. Other one-time items in the quarter included a $59.3 million non-cash mark-to-market gain in corporate other income related to the cash-settled total-return swap arranged with respect to Foster's common stock in 2008.
Molson Coor's underlying after-tax income for the quarter increased 22.7% to $212.9 million or $1.14 per share, up from $173.5 million or $0.93 per share a year ago, driven by a lower effective tax rate and strong earnings growth from MillerCoors and U.K. Business. Excluding items, underlying after tax income grew 13% to $196.1 million from $173.5 million in the same period last year.
On average, eight analysts polled by Thomson Reuters expected the company to earn $0.98 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
The company said that effective tax rate during the quarter for income from continuing operations was 9% on a reported basis and 4% on an underlying basis.
In the sequentially preceding quarter, the company reported net income attributable to Molson Coors that more than doubled to $187.3 million or $1.01 per share from $79.4 million or $0.42 per share in the year-ago period. On a non GAAP basis, Molson Coors' underlying after-tax income for the quarter increased 20.6% to $205.4 million or $1.11 per share from $170.3 million or $0.92 per share in the prior-year quarter.
Net sales for the latest third quarter declined to $853.7 million from $921.1 million last year, yet topping analysts consensus revenue estimate of $836.99 million for the quarter.
For the preceding second quarter, net sales dropped 55% to $798.9 million from $1.76 billion in the previous- year quarter.
The company's underlying pretax income from Canada in local currency for the quarter under review declined 2% from a year ago. On a reported basis, Canada underlying pretax income for the quarter was $139.3 million, down 7.7% from a year ago, as the Canadian Dollar declined, compared to the U.S. Dollar. Molson Coors underlying U.S. segment pretax income grew 16.6% year-over-year to $107.4 million due to strong underlying income growth by MillerCoors.
Operating income for the quarter declined to $237.3 million from $241.6 million a year earlier.
Molson Coors worldwide beer volume was 13.8 million hectoliters, down 2.9% from last year, reflecting challenging markets, a weak global economy, and the company's continued strategy in the U.K. to emphasize revenue growth over low-margin volume growth.
Molson Coors indicated achieving an incremental $18 million of cost savings as part of its three-year, $250 million Resources for Growth, or RFG, cost savings program during the quarter.
Separately, Molson Coors said that MillerCoors' net income attributable for the third quarter rose to $229.7 million from $168.2 million in the prior year quarter, while its net sales rose to $2.01 billion from $1.95 billion last year, driven by domestic net pricing.
During the quarter, MillerCoors reported special charges totaling $14.7 million, which include pension curtailment and integration expenses.
Excluding pension related charges and other items, MillerCoors underlying net income increased 28.1% to $244.4 million from $190.8 million in the same period last year.
MillerCoors U.K. underlying pretax earnings in local currency increased more than 20% year-over-year, while on a reported basis, underlying pretax income for the quarter was $32.7 million, an increase of $2.0 million or 6.5% from the same quarter last year.
MillerCoors indicated successfully delivering synergies, controlling costs, and managing revenue for sustainable profit growth, despite continuing commodity cost pressures. MillerCoors achieved $73 million in synergies in the quarter, mainly due to marketing synergies, as well as organizational savings resulting from the elimination of duplicate and transitional positions in the year ago quarter.
For the year-to-date period, net income attributable to Molson Coors rose to $498.3 million or $2.68 per share from $285.1 million or $1.53 per share in the year ago period. Net sales for the period declined to $1.29 billion from $1.51 billion a year earlier.
For the nine-month period, net income attributable to MillerCoors LLC increased to $740.6 million from $479.4 million last year. Non-GAAP underlying net income for nine months increased to $786.1 million from $618.1 million a year ago. Net sales for the period climbed to $5.86 billion from $5.70 billion in the same period last year.
For full year 2009, Molson Coors estimates that its underlying effective tax rate will be in the range of negative 2% to positive 2%. These tax rates are significantly lower than the company's anticipated long-term tax rate range of 22% to 26% due to the favorable resolution of unrecognized tax positions during 2009.
The company now expects to achieve $270 million of cumulative synergies by the end of 2009, surpassing its original commitment of $225 million. MillerCoors is indicated to deliver incremental cost savings above the $500 million synergy target, and around $200 million in cost savings are expected to be delivered by the end of 2012, nearly in-line with current market expectations
Amongst others in the industry, 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.
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 is trading at $47.60, down $1.81 or 3.68%, on a volume of 1.34 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $30.76 - $51.11, with a three-month average volume of 1.33 million shares.
SAB.L is trading at 1,619.00 pence , up 19.00 pence or 1.19%, on a volume of 1.53 million shares on the LSE. In the past 52 weeks, the stock trended in a broad range of 875.00 pence -1,683.00 pence on a volume of 2.68 million shares.
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