SABMiller plc (LN:SAB; OTC:SABMRY) and Molson Coors Brewing Company
(NYSE: TAP; TSX: TPX) reported solid pricing and strong Above Premium
sales growth at MillerCoors in the second quarter, despite difficult
trading conditions. Domestic net revenue per barrel increased 2.6
percent versus the same quarter in the prior year, while underlying net
income declined 5.3 percent to $412.7 million.
“This was a tough volume quarter for us and for the beer industry
overall,” said MillerCoors Chief Executive Officer Tom Long. “Our
strategy to evolve our portfolio to the fast-growing and higher-margin
areas of the business is working, as shown by the successful launch of
Redd’s Apple Ale and the nationwide expansion of Leinenkugel’s Summer
Shandy. Thanks to these initiatives, as well as the introduction of
Third Shift Amber Lager and continued growth of Blue Moon Belgian White,
we have already grown our Above Premium brand volumes to more than 9% of
our portfolio in the quarter. While we continued to gain share in
Premium Lights according to Nielsen data, we are working hard to restore
volume growth which we believe will come as the health of the category
is defined by the Premium Light performance.”
Second Quarter Highlights
Unless otherwise indicated, all amounts are in U.S. dollars and
calculated in accordance with U.S. GAAP. All percentages are versus the
prior year comparable period and include MillerCoors operations in the
U.S. and Puerto Rico.
-
Total net sales decreased 2.9 percent to $2.159 billion for the
quarter.
-
Total cost of goods sold (COGS) per barrel increased 2.4 percent.
-
Underlying net income (a non-GAAP measure) decreased 5.3 percent to
$412.7 million.
-
Domestic net revenue per barrel, excluding contract brewing and
company-owned distributor sales, increased 2.6 percent.
-
Domestic sales-to-retailers (STRs) decreased 4.4 percent.
-
Domestic sales-to-wholesalers (STWs) decreased 5.3 percent.
Brand Highlights for the Second Quarter
MillerCoors Premium Light STRs decreased high-single digits in the
quarter. Coors Light declined mid-single-digits, yet continues to lead
the Premium Light segment in share growth by leveraging its “Rocky
Mountain Cold Refreshment” positioning through advertising, innovation
and promotions. The spring launch of the new World’s Most Refreshing Can
was supported with national media, digital marketing, retail and
innovative programming like the Coors Light Refresherator, a customized
personal vending machine designed to highlight the World’s Most
Refreshing Can. Miller Lite declined high-single digits. The launch of
the new Miller Lite Pilsner Bottle has been well-received among
retailers and consumers.
Tenth and Blake Beer Company grew the MillerCoors Craft and Import
portfolio by double digits. Leinenkugel’s Summer Shandy increased double
digits as the brand continued its national expansion. Blue Moon Belgian
White grew high-single digits in the quarter, continuing its run of 46
consecutive quarters of growth. Batch 19 more than doubled as it
continued to expand nationally.
MillerCoors new expansion brands delivered strong growth in Above
Premium. Redd’s Apple Ale continued an aggressive marketing campaign,
including national and local TV, sponsorship of NASCAR Sprint Cup Series
champion Brad Keselowski for two races, and integrations with Discovery
Network. Redd's volume doubled versus the prior quarter, sourcing most
of its sales from consumers who normally drink outside the MillerCoors
portfolio. Third Shift Amber Lager gained momentum behind strong
distribution and increasing velocity trends and is already a larger
brand than well-known craft brands, such as Goose Island 312 and New
Belgium Ranger IPA, according to year-to-date Nielsen all outlet data.
MillerCoors Premium Regular portfolio declined mid-single digits. Coors
Banquet grew mid-single digits fueled by the June debut of the new
12-ounce “stubby” bottle modeled after the brand's post-Prohibition
bottle. Coors Banquet’s continued growth was offset by declines in
Miller Genuine Draft.
MillerCoors Economy portfolio declined mid-single digits. Miller High
Life continued its military veteran program and kicked off a partnership
with Harley-Davidson to celebrate the 110th anniversaries of the two
iconic American brands. Keystone Light continued its partnership with
the FLW Walmart Bass Fishing Tour Series that culminates with the
Forrest L. Wood Cup in August.
Financial Highlights for the Second Quarter
Domestic net revenue per barrel grew 2.6 percent for the quarter as a
result of higher net pricing and favorable mix.
Total company net revenue per barrel, including contract brewing and
company-owned distributor sales, increased 2.7 percent. Third-party
contract brewing volumes were down 6.6 percent.
Total COGS per barrel increased 2.4 percent, driven by commodity
inflation, brand innovation and lower fixed cost absorption.
Marketing, general and administrative costs increased 0.2 percent for
the quarter, driven primarily by increased marketing investments in
support of the national launches of Redd’s Apple Ale and Third Shift
Amber Lager and the expansion of Leinenkugel’s Summer Shandy partially
offset by lower pension expense.
In the second quarter, MillerCoors achieved $25 million of cost savings,
primarily related to procurement savings, logistics savings and brewery
efficiencies.
Depreciation and amortization expenses for MillerCoors in the second
quarter were $69.7 million, and additions to tangible and intangible
assets totaled $65.9 million.
There were no special items during the second quarter.
Overview of MillerCoors
MillerCoors brews, markets and sells the MillerCoors portfolio of brands
in the U.S. and Puerto Rico. Built on a foundation of great beer brands
and nearly 300 years of brewing heritage, MillerCoors continues the
commitment of its founders to brew the highest quality beers.
MillerCoors is the second-largest beer company in America, capturing
nearly 30 percent of U.S. beer sales. Led by two of the best-selling
beers in the industry, Coors Light and Miller Lite, MillerCoors has a
broad portfolio of highly complementary brands across every major
industry segment. The company offers a variety of leading craft and
import brands, including Blue Moon and Leinenkugel’s, through its Tenth
and Blake division. MillerCoors operates eight major breweries in the
U.S., as well as the Leinenkugel’s craft brewery in Chippewa Falls, WI
and two microbreweries, the 10th Street Brewery in Milwaukee and the
Blue Moon Brewing Company at Coors Field in Denver. MillerCoors insists
on building its brands the right way through brewing quality,
responsible marketing and environmental and community impact.
MillerCoors is a joint venture of SABMiller plc and Molson Coors Brewing
Company. Learn more at MillerCoors.com, at facebook.com/MillerCoors or
on Twitter through @MillerCoors.
Overview of SABMiller
SABMiller plc is one of the world’s leading brewers with more than 200
beer brands and some 70,000 employees in over 75 countries. The group’s
portfolio includes global brands such as Pilsner Urquell, Peroni Nastro
Azzurro, Miller Genuine Draft and Grolsch; as well as leading local
brands such as Aguila (Colombia), Castle (South Africa), Miller Lite
(U.S.), Snow (China), Victoria Bitter (Australia) and Tyskie (Poland).
SABMiller also has growing soft drinks businesses and is one of the
world’s largest bottlers of Coca-Cola products.
In the year ended 31 March 2013, the group reported group lager volumes
of 242 million hectoliters, group revenue of US$34,487 million and group
EBITA of US$6,421 million. SABMiller plc is listed on the London and
Johannesburg stock exchanges.
Learn more at www.sabmiller.com,
at www.facebook.com/sabmiller,
at www.twitter.com/sabmiller or
at www.youtube.com/sabmiller.
Overview of Molson Coors
Molson Coors Brewing Company is one of the world’s largest brewers. It
brews, markets and sells a portfolio of leading premium quality brands
such as Coors Light, Molson Canadian, Blue Moon, Staropramen, Carling,
Coors Banquet and Keystone Light in North America, Europe and Asia. For
more information regarding Molson Coors Brewing Company, visit the
company’s web site: www.molsoncoors.com.
Forward-Looking Statements
This press release includes “forward-looking statements” within the
meaning of the U.S. federal securities laws, and language indicating
trends, such as “anticipated” and “expected.” It also
includes financial information, of which, as of the date of this press
release, the Companies’ independent auditors have not completed their
audit. Although the Companies believe that the assumptions upon
which their respective financial information and their respective
forward-looking statements are based are reasonable, they can give no
assurance that these assumptions will prove to be correct. Important
factors that could cause actual results to differ materially from the
Companies’ projections and expectations are disclosed in Molson Coors’
filings with the Securities and Exchange Commission or in SABMiller’s
annual report and accounts for the year ended March 31, 2013, and in
other documents which are available on SABMiller’s website at www.sabmiller.com.
These factors include, among others, changes in consumer preferences
and product trends; price discounting by major competitors; failure to
realize anticipated results from synergy initiatives; and increases in
costs generally. All forward-looking statements in this press
release are expressly qualified by such cautionary statements and by
reference to the underlying assumptions. Neither SABMiller nor
Molson Coors undertakes to update forward-looking statements relating to
their respective businesses, whether as a result of new information,
future events or otherwise. You should not place undue reliance
on any forward-looking statement. Neither SABMiller nor Molson Coors
accepts any responsibility for any financial information contained in
this press release relating to the business or operations or results or
financial condition of the other or their respective groups.
MillerCoors Results and Related Reconciliations
The table below reconciles net income attributable to MillerCoors,
reported in accordance with U.S. GAAP as used for inclusion within
Molson Coors reported results, to MillerCoors EBITA as used for
inclusion within SABMiller’s reported results in accordance with IFRS.
Underlying net income and EBITA are non-GAAP measures. Management of
both companies believes that underlying net income and EBITA provide
shareholders with a useful basis for assessing the profit performance of
MillerCoors. There are limitations to using non-GAAP financial measures,
including the difficulty associated with comparing companies that use
similarly named non-GAAP measures whose calculations may differ from the
company’s calculations.
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Three Months Ended
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Six Months Ended
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(In millions of $US)
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June 30, 2013
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June 30, 2012
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June 30, 2013
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June 30, 2012
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U.S. GAAP: Net Income
Attributable to MillerCoors
|
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$
|
412.7
|
|
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$
|
438.3
|
|
|
$
|
684.6
|
|
|
$
|
713.6
|
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Plus: Special/Exceptional Items¹
|
|
|
-
|
|
|
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(2.3
|
)
|
|
|
-
|
|
|
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(2.3
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)
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|
|
|
|
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Non-GAAP Underlying Net Income
|
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$
|
412.7
|
|
|
$
|
436.0
|
|
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$
|
684.6
|
|
|
$
|
711.3
|
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Plus: Adjustments to IFRS Underlying EBITA-Reported2
|
|
|
2.8
|
|
|
|
41.7
|
|
|
|
30.8
|
|
|
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79.6
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Less: Restatement Adjustments to IFRS Underlying EBITA-Restated3
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-
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(12.8
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)
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-
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(12.8
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)
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IFRS: MillerCoors underlying
earnings before interest, taxes and amortization before
exceptional items (EBITA-Restated4)
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$
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415.5
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$
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464.9
|
|
|
$
|
715.4
|
|
|
$
|
778.1
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|
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Percent change versus prior year MillerCoors underlying EBITA-Restated4
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-10.6
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%
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|
|
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-8.1
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%
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1There were no Special/Exceptional items in the
current year. Prior year includes a pension curtailment gain.
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2U.S. GAAP Underlying net income to IFRS
EBITA adjustments relate to differing treatment of step-up
depreciation, pension, post-retirement benefits, consolidation of
container joint ventures, share-based compensation and severance
expenses between U.S. GAAP and IFRS. Amortization of intangible
assets, interest, taxes and non-controlling interest have been
removed to arrive at underlying EBITA.
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3With effect from April 1, 2013, SABMiller
has adopted the amended IAS 19, “Employee Benefits.” The new
accounting standard has been applied retrospectively and
SABMiller’s fiscal year ended March 31, 2013 results have been
restated accordingly.
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4EBITA-Earnings Before Interest, Taxes, and
Amortization, excluding exceptional items.
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MILLERCOORS LLC
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RESULTS OF OPERATIONS
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(VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS $US)
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(UNAUDITED)
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U.S. GAAP
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Three Months Ended
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Six Months Ended
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June 30, 2013
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June 30, 2012
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June 30, 2013
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June 30, 2012
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Volume in Barrels
|
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17,480
|
|
|
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18,490
|
|
|
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31,994
|
|
|
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33,282
|
|
|
|
|
|
|
|
|
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Sales
|
|
$
|
2,484.4
|
|
|
$
|
2,567.2
|
|
|
$
|
4,541.1
|
|
|
$
|
4,601.8
|
|
Excise Taxes
|
|
|
(325.4
|
)
|
|
|
(343.2
|
)
|
|
|
(593.8
|
)
|
|
|
(618.0
|
)
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Net Sales
|
|
|
2,159.0
|
|
|
|
2,224.0
|
|
|
|
3,947.3
|
|
|
|
3,983.8
|
|
Cost of Goods Sold
|
|
|
(1,270.1
|
)
|
|
|
(1,311.8
|
)
|
|
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(2,358.8
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)
|
|
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(2,381.8
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)
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Gross Profit
|
|
|
888.9
|
|
|
|
912.2
|
|
|
|
1,588.5
|
|
|
|
1,602.0
|
|
Marketing, General and Administrative Expenses
|
|
|
(471.0
|
)
|
|
|
(470.1
|
)
|
|
|
(896.1
|
)
|
|
|
(880.9
|
)
|
Special Items, net
|
|
|
-
|
|
|
|
2.3
|
|
|
|
-
|
|
|
|
2.3
|
|
Operating Income
|
|
|
417.9
|
|
|
|
444.4
|
|
|
|
692.4
|
|
|
|
723.4
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
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Interest Expense, net
|
|
|
(0.4
|
)
|
|
|
(0.4
|
)
|
|
|
(0.9
|
)
|
|
|
(0.7
|
)
|
Other Income, net
|
|
|
0.5
|
|
|
|
1.5
|
|
|
|
1.3
|
|
|
|
3.1
|
|
Total Other Income (Expense), net
|
|
|
0.1
|
|
|
|
1.1
|
|
|
|
0.4
|
|
|
|
2.4
|
|
Income Before Income Taxes and Non-controlling Interests
|
|
|
418.0
|
|
|
|
445.5
|
|
|
|
692.8
|
|
|
|
725.8
|
|
Income Taxes
|
|
|
(1.3
|
)
|
|
|
(1.8
|
)
|
|
|
(1.7
|
)
|
|
|
(2.5
|
)
|
Net Income
|
|
|
416.7
|
|
|
|
443.7
|
|
|
|
691.1
|
|
|
|
723.3
|
|
Net Income Attributable to Non-controlling Interests
|
|
|
(4.0
|
)
|
|
|
(5.4
|
)
|
|
|
(6.5
|
)
|
|
|
(9.7
|
)
|
Net Income Attributable to MillerCoors LLC
|
|
$
|
412.7
|
|
|
$
|
438.3
|
|
|
$
|
684.6
|
|
|
$
|
713.6
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Copyright Business Wire 2013