Friday 11 February 2011

Molson Coors selling less beer

News from Yahoo that Molson Coors is selling less beer.

Molson Coors 4Q profit falls as it sells less beer
Thu Feb 10, 6:31 pm ET
DENVER – Molson Coors Brewing Co.'s fourth-quarter net income fell by more than half as it sold less beer in the U.S. and U.K. and dealt with rising taxes and higher costs for ingredients and fuel.

The results missed analysts' average expectations, according to FactSet, and Molson's shares fell more than 4 percent Thursday.

The Denver company raised prices in the downturn to protect its profit margins, and it sold less beer as a result. Before the fourth quarter, cost-cutting was helping its profit rise.

Molson Coors reported Thursday that it earned $109.8 million, or 58 cents per share, for the quarter that ended Dec. 25. That's down 51 percent from $222.1 million, or $1.19 per share, a year earlier. Adjusted earnings amounted to 66 cents a share.

Last year's quarter was boosted by an unusually low tax rate, the company said.

Revenue excluding excise taxes rose 1.7 percent to $835.1 million because of higher prices.

The results fell short of analysts' forecasts. Analysts were looking for earnings of 69 cents per share on revenue of $837.4 million.

"In the U.S., unemployment amongst our core consumer base remains high, and U.S. beer industry volumes continue to be weak," said Peter Swinburn, president and CEO of Molson Coors.

The company offset that by raising prices and cutting costs, he said. Net income for Molson's U.S. joint venture with SABMiller, Miller Coors, rose 41 percent to $144.2 million.

But that too was short of what analysts expected, said Barclays Capital analyst Erica Chase.

The lower-than-expected profit growth in the U.S. overpowered better Canadian results and U.K. results that were in line with expectations, she said in a note to investors.

Molson Coors says it sold 1.9 percent less beer globally. The United Kingdom was particularly weak. Sales there fell 4.9 percent.

To offset weakness in more established markets, the company is trying to expand in emerging markets such as China and woo new drinkers to its Coors Light brand. Volume in the unit that includes sales outside the U.S., Canada and Britain rose 55 percent, but the unit remains a tiny portion of Molson Coors' business.

Swinburn said in 2011 the company will continue cutting costs and expanding its product offerings. For example, in January, it introduced Molson Canadian 67 in Quebec.

In the U.S. it will focus on higher-priced light beer, craft beer and imports. The company plans to introduce Miller Genuine Draft lemonade in the summer and promote seasonal versions of its Blue Moon brand.

In the first six weeks of this year, the company's sales to retailers in Canada fell by a percentage in the mid-single digits from the same period a year earlier, Swinburn said during a conference call with investors. The figure rose in the U.K. at a low single-digit rate. In the U.S., it fell in the fell by a percentage in the low single digits.

For the full year, Molson Coors earned $707.7 million, or $3.78 per share, compared with $720.4 million, or $3.87 per share, in fiscal 2009. Its annual revenue rose to $4.703 billion from $4.427 billion.

Molson shares fell $2.09, or 4.4 percent, to close at $45.48 Thursday. The stock has traded between $38.44 and $51.11 during the past year.

Cask ale is currently a growth sector in the UK market and Molson Coors recent £20 million pound acquisition of Sharps or more correctly, their acquisition of the Doom Bar Brand could now be seen in a different light. Perhaps Molson Coors and their Welsh CEO Peter Swinburn, who, incidentally started at Welsh Brewers, have seen that one reason for their 4.9% drop in sales has been the apparent lack of any cask ale brands?

The Morning Advertiser is reporting an 11% increase in UK & Ireland sales, not the 4.9% fall as reported in the Molson Coors US press release. Odd.

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