Coors Light and Miller Lite Gain Market Share of Premium Light
Segment in the Third Quarter
SABMiller plc (LN: SAB; OTC: SABMRY) and Molson Coors Brewing Company
(NYSE: TAP; TSX: TPX) reported that third quarter MillerCoors underlying
net income declined 8.6 percent to $344.4 million versus the same period
in the prior year, driven by lower volume and increased marketing
investment, partially offset by lower cost of sales, positive sales mix
and net pricing growth. For the second consecutive quarter, Coors Light
and Miller Lite both gained market share of the Premium Light segment,
with Miller Lite delivering volume growth. Combined, Coors Light and
Miller Lite delivered their best quarterly performance in three years.
“As we relentlessly pursue total portfolio growth, job number one is
taking share and growing our American Light Lagers. This past quarter,
we took a step in this direction by taking segment share with both Coors
Light and Miller Lite,” said Gavin Hattersley, MillerCoors Chief
Executive Officer. “We have a lot of work ahead of us to address our
economy segment performance, but all other segments across our portfolio
are in good shape as we close out the year. Net income was down this
quarter due to lower volume, partially due to bringing distributor
inventories down as anticipated coming out of peak-selling season, and
increased media investments across our brands.”
Third 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 market 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.
-
Underlying net income, a non-GAAP measure, decreased 8.6 percent to
$344.4 million.
-
Total net sales decreased 3.4 percent to $2.000 billion.
-
Domestic net revenue per barrel, excluding contract brewing and
company-owned distributor sales, increased 1.2 percent.
-
Total cost of goods sold (COGS) per barrel decreased 0.8 percent.
-
Domestic sales-to-retail volume (STRs) decreased 2.5 percent.
-
Domestic sales-to-wholesalers volume (STWs) decreased 4.6 percent.
Brand Highlights for the Third Quarter
Miller Lite STRs increased low-single digits and, according to Nielsen,
gained share of the Premium Light segment in the third quarter. Earlier
this year, the brand launched a new advertising campaign titled
“Bodega,” designed to further leverage Miller Lite’s perspective that
people stay connected to who they really are, just as the brand has
reconnected with its true self. The brand has gained momentum since
returning to its original white packaging and is further celebrating its
history and heritage by releasing the original Steinie bottle from 1975.
The shorter neck bottle is available now for a limited time, with
production set to end at the close of the year.
Coors Light declined low-single digits but gained share of the Premium
Light segment in the third quarter. Coors Light continued to execute its
brand overhaul with the continued rollout of a contemporary and new
visual identity across all packages, while 72andSunny was announced as
the new advertising and digital agency of record for the Coors family of
brands. The Los Angeles-based company, which was named “Agency of the
Year” by AdAge in both 2013 and 2014, will drive forward the
unique, engaging stories behind the Coors Light brand.
Our Above Premium portfolio was down low-single digits this quarter with
the strategic de-prioritization of Miller Fortune, while the portfolio
was up low-single digits excluding Fortune. The Redd’s franchise
achieved mid-single digit growth, driven by Redd’s Wicked brands,
including the 2015 introduction of Redd’s Wicked Mango.
The MillerCoors Tenth & Blake portfolio grew low-single digits. The Blue
Moon Brewing Company grew low-single digits, driven by Blue Moon Belgian
White’s 80th consecutive quarter of growth and the release of
Blue Moon White IPA, which is the No. 4 new craft offering in 2015,
according to Nielsen. The Jacob Leinenkugel Brewing Company grew
low-single digits, driven by the continued growth of its Shandy
portfolio, and its newest varietals, Harvest Patch Shandy and Grapefruit
Shandy. According to Nielsen, Grapefruit Shandy is the No. 1 new craft
offering in 2015. MillerCoors also announced the acquisition of San
Diego’s Saint Archer Brewing Company, a fast-growing craft brewer with a
portfolio currently available only in California.
In the Premium Regular segment, Coors Banquet grew low-single digits in
the third quarter and is in the midst of its ninth consecutive year of
growth. According to Nielsen, Coors Banquet remains the only national
Premium Regular brand that is growing due to its continued success with
the “stubby” heritage bottle, led by 12-packs and 18-packs nationwide.
The growth from Banquet partially offset a double-digit decline for
Miller Genuine Draft.
Consistent with the overall industry trend that has seen declines in
economy brands, the MillerCoors Below Premium portfolio decreased
mid-single digits, driven by a double-digit decline of Milwaukee’s Best
and a high-single digit decline of Keystone Light, while Miller High
Life declined mid-single digits. Steel Reserve grew low-single digits,
due to the continuing success of the Steel Reserve Alloy Series, the
brand’s line of flavored malt beverages.
Financial Highlights for the Third Quarter
Domestic net revenue per barrel grew 1.2 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 1.1 percent. Third-party
contract brewing volumes were down 3.5 percent.
Total COGS per barrel decreased 0.8 percent, driven by lower aluminum
pricing, malt and corn costs, and fuel expense, along with supply chain
cost savings. These factors were partially offset by brewery and freight
inflation, and lower fixed-cost absorption due to lower volumes.
Marketing, general and administrative costs increased by 5.6 percent,
driven by higher brand investments, employee related benefits and
technology investments.
MillerCoors achieved cost savings of $26 million in the third quarter,
primarily related to procurement savings and brewery efficiencies.
Depreciation and amortization expenses for MillerCoors in the third
quarter were $99.9 million, including accelerated depreciation related
to the planned closure of our Eden, North Carolina, brewery of $21.8
million included in special items. Additions to tangible and intangible
assets totaled $77.3 million.
Special items of $28 million were recognized in the third quarter
related to the announced closure of the Eden Brewery, with additional
special items expected to be recognized through the third quarter of
2016, when the closure is planned.
# # #
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 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 is in the beer and soft drinks business, bringing refreshment
and sociability to millions of people all over the world who enjoy our
drinks. The company does business in a way that improves livelihoods and
helps build communities.
SABMiller is passionate about brewing and has a long tradition of
craftsmanship, making superb beer from high quality natural ingredients.
Our local beer experts brew more than 200 beers from which a range of
special regional and global brands have been carefully selected and
nurtured.
SABMiller is a FTSE-20 company, with shares trading on the London Stock
Exchange, and a secondary listing on the Johannesburg Stock Exchange.
The group employs 69,000 people in more than 80 countries from Australia
to Zambia, Colombia to the Czech Republic, and South Africa to the USA.
Every minute of every day, more than 140,000 bottles of SABMiller beer
are sold around the world.
In the year ended 31 March 2015, SABMiller sold 324 million hectoliters
of lager, soft drinks and other alcoholic beverages, generating group
net producer revenue of US$26,288 million and EBITA of US$6,367 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, 2015, 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
|
|
Nine Months Ended
|
(In millions of $US)
|
|
Sept 30, 2015
|
|
Sept 30, 2014
|
|
Sept 30, 2015
|
|
Sept 30, 2014
|
|
|
|
|
|
|
|
|
|
U.S. GAAP: Net Income Attributable to MillerCoors
|
|
$
|
316.5
|
|
$
|
376.5
|
|
$
|
1,108.3
|
|
$
|
1,112.9
|
Plus: Special/Exceptional Items¹
|
|
|
28.0
|
|
|
0.2
|
|
|
28.0
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect of the adjustments to arrive at underlying net income2
|
|
|
(0.1)
|
|
|
-
|
|
|
(0.1)
|
|
|
-
|
Non-GAAP Underlying Net Income
|
|
$
|
344.4
|
|
$
|
376.7
|
|
$
|
1,136.2
|
|
$
|
1,114.3
|
Adjustments to IFRS Underlying EBITA-Reported3
|
|
|
33.2
|
|
|
20.0
|
|
|
96.4
|
|
|
68.8
|
Restatement Adjustments to IFRS Underlying EBITA-Restated4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3.5
|
|
|
|
|
|
|
|
|
|
IFRS: MillerCoors underlying earnings before
interest, taxes and amortization before exceptional items (EBITA5)
|
|
$
|
377.6
|
|
$
|
396.7
|
|
$
|
1,232.6
|
|
$
|
1,186.6
|
|
|
|
|
|
|
|
|
|
Percent change versus prior year MillerCoors underlying EBITA
Restated5
|
|
|
(4.8%)
|
|
|
|
|
3.9%
|
|
|
|
1Current year Special/Exceptional items
include costs related to the planned closure of the Eden Brewery,
including accelerated depreciation of $21.8M. Prior year
Special/Exceptional items include restructuring related costs
|
|
2The tax effect of the adjustments to arrive
at underlying net income attributable to MillerCoors, a non-GAAP
measure is calculated based on the estimated tax rate applicable
to the item(s) being adjusted in the period in which they arose.
3GAAP 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.
4With 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.
5EBITA-Earnings Before Interest, Taxes, and
Amortization, excluding exceptional items.
|
|
|
MILLERCOORS LLC
|
RESULTS OF OPERATIONS
|
(VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS $US)
|
(UNAUDITED)
|
U.S. GAAP
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
Sept 30, 2015
|
|
Sept 30, 2014
|
|
Sept 30, 2015
|
|
Sept 30, 2014
|
|
|
|
|
|
|
|
|
|
Total STW volume in barrels
|
|
|
15,740
|
|
|
16,470
|
|
|
46,506
|
|
|
47,843
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
2,286.8
|
|
$
|
2,374.3
|
|
$
|
6,826.9
|
|
$
|
6,951.3
|
Excise taxes
|
|
|
(286.8)
|
|
|
(304.8)
|
|
|
(849.6)
|
|
|
(884.7)
|
Net sales
|
|
|
2,000.0
|
|
|
2,069.5
|
|
|
5,977.3
|
|
|
6,066.6
|
Cost of goods sold
|
|
|
(1,173.9)
|
|
|
(1,237.7)
|
|
|
(3,490.6)
|
|
|
(3,614.2)
|
Gross profit
|
|
|
826.1
|
|
|
831.8
|
|
|
2,486.7
|
|
|
2,452.4
|
Marketing, general and administrative expenses
|
|
|
(475.1)
|
|
|
(449.7)
|
|
|
(1,333.0)
|
|
|
(1,321.8)
|
Special items, net
|
|
|
(28.0)
|
|
|
(0.2)
|
|
|
(28.0)
|
|
|
(1.4)
|
Operating income
|
|
|
323.0
|
|
|
381.9
|
|
|
1,125.7
|
|
|
1,129.2
|
Interest income (expense), net
|
|
|
(0.3)
|
|
|
(0.4)
|
|
|
(1.0)
|
|
|
(1.0)
|
Other income (expense), net
|
|
|
0.2
|
|
|
1.1
|
|
|
4.6
|
|
|
4.3
|
Income before income taxes and non-controlling interests
|
|
|
322.9
|
|
|
382.6
|
|
|
1,129.3
|
|
|
1,132.5
|
Income taxes
|
|
|
(1.1)
|
|
|
(1.3)
|
|
|
(3.8)
|
|
|
(4.6)
|
Net income
|
|
|
321.8
|
|
|
381.3
|
|
|
1,125.5
|
|
|
1,127.9
|
Net income attributable to non-controlling interests
|
|
|
(5.3)
|
|
|
(4.8)
|
|
|
(17.2)
|
|
|
(15.0)
|
Net income attributable to MillerCoors LLC
|
|
$
|
316.5
|
|
$
|
376.5
|
|
$
|
1,108.3
|
|
$
|
1,112.9
|
|
|
|
|
|
|
|
|
|
|
|
|
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