Beer brewer Molson Coors Brewing Co. (TAP, TAP.A.TO, TAP.B.TO), Tuesday, reported a more than two-fold rise in its fourth-quarter profit, helped by income tax benefits. Worldwide beer volume declined, amid challenging markets and weak global economy.
Separately, MillerCoors, the joint venture between Molson Coors and SABMiller plc (SAB.L), posted higher profit for the fourth quarter, reflecting lower one-time charges.
Fourth-quarter net income attributable to Molson Coors was $222.1 million, up from $93.7 million a year ago. Earnings per share were $1.19 compared with $0.51 in the prior-year quarter.
During the fourth quarter of 2009, the company reported net special charges of $11.1 million pretax, primarily of a non-income-related tax reserve of $10.4 million and restructuring charges of $0.6 million in the U.K. The results also included a $46 million gain on the sale of the Montreal Canadiens Hockey Club in Canada.
Further, the company's fourth quarter of 2009 was benefited by an income tax benefit of $86 million, compared with an income tax expense of $21.5 million last year.
Underlying after-tax income increased 85.5% in the fourth quarter to $190.3 million or $1.02 per share from $102.6 million or $0.55 per share a year ago, driven by a lower effective tax rate, positive net pricing, cost savings, and favorable currency movements.
On average, 10 analysts polled by Thomson Reuters expect a profit of $1.10 per share for the quarter. Analysts' forecast typically excludes one-time items.
Commenting on the results, Peter Swinburn, Molson Coors president and chief executive officer, stated, "Underlying earnings for our company increased more than 85 percent in the 4th quarter versus a year ago, driven by a one-time reduction in tax rate. Behind the headline number, our results were affected by weak volumes across all markets, cost inflation in the U.S. and U.K. and brand investments in Canada."
Molson Coors' quarterly net sales rose to $820.8 million from $739.2 million in the previous year. Analysts had a consensus sales estimate of $784.43 million for the quarter.
Worldwide beer volume was down 4% to 12.12 million hectoliters, driven by challenging markets, a weak global economy, and the company's continued strategy in the U.K. to forgo low-margin volume.
Based on segments, Canada Business generated net sales of $442.8 million, up from $406.6 million in the previous year. The United Kingdom Business posted quarterly net sales of $358.6 million, up from $315.8 million last year.
In a separate announcement, MillerCoors reported fourth-quarter net income attributable to MillerCoors of US$102.2 million, compared to US$54.1 million in the year-ago quarter.
In the fourth quarter, the joint venture reported special charges of $3.9 million, which includes relocation and severance expenses relating to the integration of MillerCoors. This compares with charges of $81.2 million in the prior-year quarter.
Underlying net income, excluding special items, decreased 21.6% to US$106.1 million from US$135.3 million in the same quarter last year.
MillerCoors' net sales declined 1.6% in the fourth quarter to US$1.71 billion from US$1.74 billion in the year-ago quarter. Excluding contract brewing and company-owned distributor sales, domestic net revenue decreased 2.1% to $1.585 billion.
MillerCoors also stated that domestic net revenue per barrel was up 2.3% in the fourth quarter. Sales-to-wholesalers declined 4.2%, driven by lower retail sales and a reduction in contract brewing volumes.
MillerCoors said it is facing a difficult U.S. economy that took its toll on beer sales in the fourth quarter. Softening industry volumes and resulting cost deleverage were partly offset by pricing, synergies delivery, and reductions in marketing, general and administrative costs.
Further, MillerCoors said quarterly volumes of premium light brands; Miller Lite, Coors Light and MGD 64, were down mid-single digits due to declines in Miller Lite and to a lesser extent Coors Light, partially offset by the continued success of MGD 64.
MillerCoors also stated that as announced in the third quarter, it is on track to deliver $750 million in total synergies and other cost savings by the end of 2012.
Molson Coors' International Markets business reported fourth-quarter net sales of $19.4 million, higher than the prior-year quarter's $16.8 million.
Molson Coors reported fiscal 2009 net income attributable to the company of $720.4 million or $3.87 per share, compared with $3.78.7 million or $2.04 per share a year ago. Full-year net sales declined to $3.03 billion from $4.77 billion last year.
Moving forward, Molson Coors stated that overall consumer demand remains sluggish. The company expects these conditions to continue to impact volume and mix in the near term.
"Looking to 2010, we expect volume to remain challenging, especially in the first half, but we are focused on continuing to establish a strong brand base to our business that ensures we not only manage the current market but that we take full advantage of revenue upsides when momentum improves," Swinburn added.
TAP is trading at $40.65, down $0.66, on a volume of 671,909 shares.
On the LSE, SAB.L dropped 34 pence and is trading at 1,665 pence on a volume of 2.69 million shares.
For comments and feedback: editorial@rttnews.com