SABMiller plc (LN:SAB; OTC:SABMRY) and Molson Coors Brewing Company
(NYSE: TAP; TSX: TPX) reported that MillerCoors first quarter underlying
net income grew 4.4 percent versus the same period in the prior year to
$304.6 million. This income growth was driven by higher net pricing,
positive sales mix and strong cost control.
“In the first quarter, we continued to grow our largest Above Premium
brands while also making strides toward restoring growth to our Premium
Lights,” said Tom Long, MillerCoors Chief Executive Officer. “In the
coming months, we’ll continue to bolster Miller Lite’s success with a
new national advertising campaign, and we’ll execute a holistic refresh
of Coors Light that will extend across all consumer touch points,
starting with new packaging that emphasizes its ‘Born in the Rockies’
heritage. We’ll continue to win in Above Premium by amplifying and
expanding our higher-margin offerings like Redd’s, Blue Moon and
Leinenkugel’s Shandy portfolio as we head into the summer selling
season.”
First Quarter Highlights
Unless otherwise indicated, all amounts are in U.S. dollars and
calculated in accordance with accounting principles generally accepted
in the U.S. (U.S. GAAP). All share references are per A.C. Nielsen.
Percentages are versus the prior year comparable period and include
MillerCoors operations in the U.S. and Puerto Rico.
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Underlying net income, a non-GAAP measure, increased 4.4 percent to
$304.6 million.
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Total net sales decreased 0.9 percent to $1.775 billion.
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Domestic net revenue per barrel, excluding contract brewing and
company-owned distributor sales, increased 1.6 percent.
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Total cost of goods sold (COGS) per barrel increased 0.7 percent.
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Domestic sales-to-retail volume (STRs) decreased 2.7 percent.
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Domestic sales-to-wholesalers volume (STWs) decreased 2.5 percent.
Brand Highlights for the First Quarter
The MillerCoors Premium Light portfolio STRs declined low-single digits,
in part due to industry softness in the first two months of the quarter.
Miller Lite declined low-single digits but gained share of the Premium
Light segment in the first quarter. The brand continues to benefit from
its graphic design overhaul, executed last year and inspired by the
Original Lite Can. In January, the brand launched its “Liquid Pride”
television campaign to reinforce the quality story behind its pilsner
roots, which will continue to air through the summer. The brand will
release new television advertising in May designed to further leverage
Miller Lite’s authenticity and sessionability. In addition, Miller Lite
has begun releasing cans with unique designs linked to local events,
like the South by Southwest festival in Austin, Texas, and NASCAR races
in local markets.
Coors Light declined low-single digits for the first quarter, but
achieved a 90 basis point trend improvement versus the fourth quarter
2014. In the first quarter, Coors Light began to execute a brand
overhaul that will emphasize its Rocky Mountain Refreshment. The
overhaul began with the rollout of a new can design in late March and
will continue through July. The brand debuted new national television
advertising in March designed to emphasize Coors Light’s unique
refreshment and will launch additional television advertising in June.
The brand re-introduced its summer line extension, Coors Light Citrus
Radler, in April.
The MillerCoors Above Premium portfolio STRs declined low-single digits
in the first quarter, driven by launch volumes of Miller Fortune in the
prior year. Excluding Miller Fortune, STRs in the segment grew
low-single digits. The Redd’s Franchise is the fastest-growing flavored
malt beverage (FMB) in the category in 2015, accelerating to double
digits in the first quarter. In March the brand introduced its newest
flavor, Redd’s Green Apple, which is off to a promising start; and
Redd’s Wicked Apple, introduced just last year, captured the most share
of any FMB in the Above Premium segment. The brand will continue to draw
new consumers to the segment with unique flavors like Redd’s Wicked
Mango, which also was introduced in March. Smith & Forge gained share of
segment in the first quarter, and though it was only introduced last
year, it is the number three cider brand in the segment by volume,
according to Nielsen.
The Blue Moon franchise accelerated to mid-single digits in the first
quarter. The Blue Moon Brewing Company is celebrating its 20th
anniversary in 2015 and announced that it will open a new brewery in
Denver’s River North district next year. Blue Moon seasonal volumes grew
double digits in the first quarter, driven by the success of the spring
seasonal, First Peach Ale. The brand launched its summer seasonal,
Summer Honey Wheat, on April 1. Jacob Leinenkugel Brewing Company
achieved high-single digit growth in the first quarter, aided by double
digit growth of Leinenkugel’s Summer Shandy. Also in March, the brand
released its newest offering, Grapefruit Shandy, to capitalize on a
grapefruit beer market that grew triple digits in 2014, and it is off to
a strong start. Leinenkugel’s will support its shandy portfolio with
national television advertising that will air in May.
Coors Banquet grew mid-single digits for the first quarter. In the first
quarter, the brand’s “stubby” heritage bottle was expanded into
12-packs, 18-packs and 20-packs nationwide. This year, Banquet will
introduce four new classic can designs that will emphasize the brand’s
heritage and authenticity. The brand released national advertising to
further leverage those concepts in March.
The MillerCoors Below Premium portfolio declined mid-single digits,
driven by high-single digit declines of Keystone Light and Milwaukee’s
Best. This is attributable primarily to a reduction in national
marketing investment on Keystone Light and the underperformance of
Milwaukee’s Best Light.
Miller High Life declined low-single digits in the first quarter,
sustaining a trend improvement versus recent years. The brand will
continue its “I Am Rich,” advertising campaign, and will introduce its
American Artist Series in May, featuring limited edition packaging with
original artist illustrations. Steel Reserve grew high-single digits in
the first quarter, due in large part to the success of the Steel Reserve
Alloy Series, the brand’s line of flavored malt beverages. To satisfy
the economy drinkers’ desire for more flavorful choices, the Alloy
Series added Margarita and Hard Pineapple flavors in the first quarter.
Financial Highlights for the First Quarter
Domestic net revenue per barrel grew 1.6 percent as a result of
favorable net pricing and positive sales mix.
Total company net revenue per barrel, including contract brewing and
company-owned distributor sales, increased 1.5 percent. Third-party
contract brewing volumes were down 1.0 percent.
Total COGS per barrel increased 0.7 percent, driven by brewery
inflation, higher costs associated with brand innovation and lower fixed
cost absorption due to lower volumes. Unfavorability was partially
offset by lower costs on malt and fuel, as well as by supply chain cost
savings.
Marketing, general and administrative costs decreased by 2.3 percent,
driven by lower general and administrative costs, partially offset by
higher marketing investment than the prior year comparable quarter.
MillerCoors achieved cost savings of $15 million in the first quarter,
primarily related to procurement savings, logistics and brewery
efficiencies.
Depreciation and amortization expenses for MillerCoors in the first
quarter were $76.7 million, and additions to tangible and intangible
assets totaled $76.3 million.
There were no special items in the quarter.
Overview of MillerCoors
Through its diverse collection of storied breweries, MillerCoors brings
American beer drinkers an unmatched selection of the highest quality
beers steeped in centuries of brewing heritage. Miller Brewing Company
and Coors Brewing Company offer domestic favorites such as Coors Light,
Miller Lite, Miller High Life and Coors Banquet. Tenth and Blake Beer
Company, our craft and import division, offers beers such as
Leinenkugel’s Summer Shandy from sixth-generation Jacob Leinenkugel
Brewing Company and Blue Moon Belgian White from modern craft pioneer
Blue Moon Brewing Company, which celebrates its 20th Anniversary this
year. Tenth and Blake also operates Crispin Cidery, an artisanal maker
of pear and apple ciders using fresh-pressed American juice. The company
imports world-renowned beers such as Italy’s Peroni Nastro Azzurro, the
Czech Republic’s Pilsner Urquell and the Netherlands’ Grolsch.
MillerCoors also offers pioneering new brands such as the Redd’s
franchise, Redd’s Wicked and Smith & Forge Hard Cider. MillerCoors seeks
to become America’s best beer company through an uncompromising promise
of quality, a keen focus on innovation and a deep commitment to
sustainability. 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 in the beer and soft drinks business. We are the
world's second largest brewing company and are one of the world's
largest bottlers of Coca-Cola drinks. We also produce a portfolio of
wholly-owned soft drinks brands. We are a FTSE-20 company, with shares
trading on the London Stock Exchange, and we have a secondary listing on
the Johannesburg stock exchange. We operate in more than 80 countries
with around 70,000 employees. The group's brand portfolio includes
leading local brands such as Aguila (Colombia), Castle (South Africa),
Miller Lite (USA), Snow (China), Victoria Bitter (Australia) and Tyskie
(Poland) as well as global brands such as Pilsner Urquell, Peroni Nastro
Azzurro, Miller Genuine Draft and Grolsch. Every minute of every day,
more than 140,000 bottles of SABMiller beer are sold.
In the year ended 31 March 2014, the group sold 318 million hectoliters
of lager, soft drinks and other alcoholic beverages, generating group
net producer revenue of US$26,719 million and EBITA of US$6,453 million.
Further information is also available on:
www.sabmiller.com
www.facebook.com/sabmiller
www.twitter.com/sabmiller
www.youtube.com/sabmiller
Overview of Molson Coors
Molson Coors Brewing Company is one of the world’s largest brewers. The
Company’s operating segments include Canada, the United States, Europe,
and Molson Coors International (MCI). The Company has a diverse
portfolio of owned and partner brands, including signature brands
Carling, Coors Banquet, Coors Light, Molson Canadian and Staropramen.
Molson Coors is listed on the 2014/2015 Dow Jones Sustainability World
Index (W1SGITRD), the most recognized global benchmark of sustainability
among global corporations. For more information on Molson Coors Brewing
Company, visit the company’s website, 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, 2014, 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 cost saving 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 as
adopted by the European Union. 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 between companies.
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Three Months Ended
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(In millions of $US)
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Mar 31, 2015
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Mar 31, 2014
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U.S. GAAP: Net Income
Attributable to MillerCoors
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$
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304.6
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$
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291.2
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Plus: Special/Exceptional Items¹
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-
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0.7
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Non-GAAP Underlying Net Income
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$
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304.6
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$
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291.9
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Adjustments to IFRS Underlying EBITA-Reported2
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40.6
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24.0
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Restatement Adjustments to IFRS Underlying EBITA – Restated3
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-
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3.5
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IFRS: MillerCoors underlying
earnings before interest, taxes and amortization before
exceptional items (EBITA4)
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$
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345.2
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$
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319.4
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Percent change versus prior year MillerCoors underlying EBITA
Restated4
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8.1
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%
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1Prior year Special/Exceptional items include
restructuring related costs.
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2GAAP 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 certain special items
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, 2014, SABMiller
adopted IFRS 10, “Consolidated Financial Statements.” The
accounting standard has been applied retrospectively and results
have been restated for SABMiller’s fiscal year ended March 31,
2014.
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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 $US)
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(UNAUDITED)
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U.S. GAAP
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Three Months Ended
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Mar 31, 2015
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Mar 31, 2014
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Total STW volume in barrels
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13,721
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14,051
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Sales
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$
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2,025.8
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$
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2,050.1
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Excise taxes
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(251.2
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)
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(259.7
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)
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Net sales
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1,774.6
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1,790.4
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Cost of goods sold
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(1,076.2
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)
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(1,094.1
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)
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Gross profit
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698.4
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696.3
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Marketing, general and administrative expenses
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(389.1
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)
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(398.1
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)
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Special items, net
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-
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(0.7
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)
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Operating income
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309.3
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297.5
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Interest income (expense), net
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(0.3
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)
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(0.3
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)
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Other income (expense), net
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1.3
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0.3
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Income before income taxes and non-controlling interests
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310.3
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297.5
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Income taxes
|
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(1.1
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)
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(1.9
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)
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Net income
|
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|
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309.2
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|
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295.6
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Net income attributable to non-controlling interests
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(4.6
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)
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(4.4
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)
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Net income attributable to MillerCoors LLC
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$
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304.6
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$
|
291.2
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Copyright Business Wire 2015