MONTREAL — Molson Coors Brewing Co. (TSX:TPX.B, NYSE:TAP) says its second-quarter profit more than doubled even though penny-pinching consumers and a soggy Canadian summer contributed to reduced sales.
Reporting in U.S. dollars, the Montreal and Denver-based beer maker says it earned $187.3 million or $1.01 per share in the three months that ended in June, as higher overall prices and reduced costs offset lower sales volumes.
That compares with earnings of 42 cents a share in the same period last year or $79.4 million, before Molson Coors and SABMiller PLC formed their joint venture MillerCoors.
“What I’ve seen since coming back to Canada is that boy the weather sure seems to have deteriorated over the years,” Dave Perkins, the new chief executive of Molson Canada, said in a conference call.
“It is a cold summer and I think that’s the biggest factor that we’re seeing in July (early in the third quarter). It’s anybody’s bet obviously how that plays out through the rest of the summer”.
The underlying pretax income in Molson’s Canadian business decreased 11 per cent to $137.3 million as the lower Canadian dollar reduced profits by $18 million. In local currency, income grew two per cent”.
However, Molson Coors’ sales to retail decreased 0.5 per cent as Canadian beer industry volumes grew about 1.8 per cent, decreasing its total market share by 0.9 per cent.
Canada’s sales volume was 2.4 million hectolitres, down 2.9 per cent from 2008, while net sales decreased 11.6 per cent to $471 million.
Total net sales excluding the United States totalled $798.9 million. MillerCoors sales were $2.14 billion.
Excluding one-time charges, Molson Coors earned $1.11 per share, higher than the 97 cents predicted by analysts.
Underlying after-tax profits increased 20.6 per cent to $205.4 million, up from $170.3 million, or 92 cents a year earlier.
The volume of beer sold fell 3.2 per cent worldwide.
“Our company is off to a solid start in the first half of this year, reflecting the benefit of our strong brands, strategic initiatives, and cost reduction programs,” Chief executive Peter Swinburn told analysts.
“In Canada, for the balance of 2009 we expect a challenging environment due to weak economic conditions and a continuation of consumers seeking value propositions.”
The brewer, which has been affected by deep discounting particularly in Quebec, plans to address value brands and boost its marketing to kick start its Molson Canadian brand.
Molson Coors achieved $32 million of cost savings in the quarter, including $3 million from its share of the MillerCoors joint venture. It also realized $25 million of the $60 million in synergies obtained by MillerCoors.
U.S. segment pretax income increased 26.5 per cent to $142.7 million due to strong growth by MillerCoors. In Britain, profits increased 70 per cent to $36.8 million, despite a $10 million hit from the value of the British pound.
British beer volumes decreased 12.4 per cent due to the soft industry performance and the company’s strategy to forgo low-margin sales.
The Toronto Stock Exchange was closed for the civic holiday on Monday. On the New York Stock Exchange, Molson Coors shares gained $2.04 or 4.51 per cent, to $47.25 in early afternoon trading.