MONTREAL — Three new beers and this weekend’s Olympic launch of a new Molson Canadian ad campaign should help Molson Coors Brewing to begin offsetting a decade of deterioration, the company’s chief executive said Tuesday.
“We are putting quite a bit of money behind the Molson stable,” Peter Swinburn said in an interview referring to Export, Dry and Canadian.
“The (Molson Canadian) brand has been in decline for 10 years so we’ve got to keep things in perspective. We believe it will be a good first step in re-establishing the credentials of the brand.”
Instead of lowering prices, Swinburn said Molson’s strategy is to attract more sales by adding new brands.
Last fall’s introduction of M, Canadian 67 and Rickard’s Dark has already helped to stem the economic downturn’s impact on sales, he said.
“They did make a meaningful contribution to our performance,” Swinburn said.
The brewer, which reports in U.S. dollars, earned $222.1 million, or $1.19 per share in the quarter ending Dec. 26. That was up from $93.7 million, or 51 cents per share, in last year’s fourth quarter.
Without one-time items, the company earned $190.3 million, or $1.02 a share.
Worldwide volume sold of the company’s beers, including Blue Moon and Coors Light, fell four per cent as people cut back on their purchases. Still, higher prices helped drive an 11 per cent rise in net sales to US$820.8 million, up from $739.2 million a year ago.
The average analyst estimate, which typically excludes one-time items, was for earnings per share of $1.10 on revenue of $784.4 million, according to Thomson Reuters.
In Canada, sales to retailers fell 1.2 per cent in the quarter as costs fell three per cent as the cost to make and sell beer dropped. Coors Light sales grew, but Molson’s Canadian, Dry and Export brands fell.
While the industry saw sales fall by 1.9 per cent, Molson Coors saw its market share grow by one-quarter percentage point. Ontario, Quebec and Atlantic Canada, which account for about 75 per cent of its Canadian sales, were the best performing regions.
Molson Canada president Dave Perkins said the new brands help the brewer to better cover a variety of consumer occasions.
“Because we’re not able to say with certainty what the trends across segments will be, I think it’s important to have a portfolio that can deal with the movements that we see going on these days,” Perkins told analysts.
Ann Gilpin of Morningstar said the results were slightly above forecast but were marked by weak revenue momentum.
“We are encouraged to see the reversal of its market share losses in Canada, but we continue to believe the Canadian and U.S. beer markets will remain weak in 2010 because of subdued consumer spending,” she said in a report.
Molson Coors also netted $46 million from the sale of its 19.9 per cent share of the Montreal Canadiens to a consortium led by the Molson family.
Swinburn said he expects the weak sales volumes to continue, especially in the first half of the year despite a boost from being an official sponsor of the Vancouver Olympics.
“Certainly it will be very good ... but it’s not going to overtake six months of industry trends one way or another.”
In Britain, volume fell 9.3 per cent in the quarter, far ahead of the industry’s four per cent drop. Molson Coors’ decision to hold firm on pricing also contributed to the decline. The cost of making beer there increased 12 per cent in local currency.
In the U.S., where the company has its MillerCoors joint venture with SABMiller’s U.S. unit, sales to retailers fell 3.6 per cent. Net revenue decreased 1.6 per cent to $1.71 billion, although pricing was strong.
Shares listed on the New York Stock Exchange (NYSE:TAP) closed down US$1.33 at US$39.98. Molson Coors Canada shares listed on the Toronto Stock Exchange (TSX:TPX.B) fell C$1.23 to close at $43.62.