Molson Coors Brewing Co. (TAP, TPX.TO) on Tuesday reported a 55 percent decline in profit for the first quarter as higher sales and volume were more than offset by expenses related to the Central Europe operations acquired last year in addition to poor weather in key markets. Both revenue and earnings per share missed analysts' expectations.
Peter Swinburn, president and CEO of Molson Coors said, "Our first quarter numbers include the effect of the Central Europe acquisition that we completed in the middle of last year. Because of this addition, we recorded volume and sales increases but a post-tax income decline. The decline was driven by Central Europe debt servicing costs being allocated against our lowest earnings quarter of the year in that region, along with foreign exchange losses and increased marketing spend across the rest of the business."
Molson Coors' first-quarter net income was $35.6 million or $0.20 per share, down from $79.5 million or $0.44 per share in the year-ago period.
Underlying after-tax income declined to $54.6 million or $0.30 per share from $85.3 million or $0.47 per share in the same period last year. On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $0.34 per share for the quarter. Analysts' estimates typically exclude special items.
The 36 percent decline in underlying after-tax income reflects the addition of Central Europe-related debt service costs and operating results this year, in a seasonally low profit quarter. Results were also impacted by unfavorable foreign exchange movements, increased brand investments, and poor weather in key markets this year.
Net income from continuing operations decreased 54 percent due to the same factors affecting underlying earnings, as well as an unrealized net loss related to fair value and foreign exchange movements associated with 500 million euros convertible note.
Net sales for the quarter rose 20 percent to $828.5 million from $691.4 million in the prior-year quarter. Analysts had a consensus revenue estimate of $854.16 million.
The increase in sales reflects the June 2012 acquisition of the company's new Central Europe or CE operations.
The company's worldwide beer volume for the quarter increased 20.3 percent to 11.93 million hectoliters.
Meanwhile, MillerCoors LLC, the U.S. joint venture with SABMiller Plc (SAB.L, SABMRY.PK), reported a decline in net income for the first quarter to $271.9 million from $275.3 million in the same period last year. However, net sales rose 2 percent to $1.79 billion from $1.76 billion in the prior-year quarter.
In Tuesday's regular session, TAP is trading at $49.45, down $1.52 or 2.98 percent on a volume of 675,584 shares.
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