| Wed 5 Nov 2008, 9:38 | | SAB - SABMiller Plc And Molson Coors Report Millercoors Third |
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SAB
SOSAB
SAB - SABMiller Plc And Molson Coors Report Millercoors Third
Quarter Earnings
SABMiller Plc
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
SABMILLER PLC AND MOLSON COORS REPORT MILLERCOORS THIRD QUARTER EARNINGS
New U.S. Joint Venture Increases Sales-to-Retailers, Pricing, Revenue
and Underlying Income in First Quarter of Combined Operations
November 5, 2008 (London and Denver) - SABMiller plc (SAB.L) and Molson
Coors Brewing Company (NYSE: TAP; TSX) today reported strong performance
by their new U.S. joint venture in its first quarter of combined
operations. MillerCoors drove higher sales-to-retailers, pricing,
revenue, as well as strong double-digit underlying income for the fiscal
third quarter ended September 30, 2008.
"As expected, MillerCoors is already driving profitable growth based on
our early efforts to build a stronger and more competitive U.S. brewer
with the people, partners, brands and scale to win," said MillerCoors
Chief Executive Officer Leo Kiely. "Our people are making it happen and
these impressive financial results demonstrate our passion to deliver on
our vision to become America`s best beer company."
"Despite the challenging U.S. economy and ongoing changes to the
competitive dynamics in the U.S. beer industry, our first quarter of
combined performance demonstrates the tremendous potential of our new
company," Kiely added.
BRAND HIGHLIGHTS
Key operating results for the third quarter are compared to prior year
on a pro forma basis and include the U.S. and Puerto Rico operations of
the combined company.
- MillerCoors total brand portfolio grew sales-to-retailers STRs) by 0.7
percent on a comparable basis
- Seven of the 12 largest MillerCoors brands increased STRs, led by
strong Coors Light growth; five brands grew share including Coors
Light, Blue Moon, Miller High Life, Peroni Nastro Azzuro and Coors
Banquet
- Blue Moon, Peroni Nastro Azzuro, Coors Banquet, Sparks and Keystone
Light achieved double-digit growth
- MGD 64 grew well ahead of expectations in the early stages of its
national launch
During the period, MillerCoors STRs rose by 0.7 percent after adjusting
for the extra trading day in the period (+2.3% unadjusted), due to
continued momentum from seven of its 12 largest brands. MillerCoors
shipments-to-wholesalers (STWs) declined by 0.5 percent, due to
reductions in distributor inventory levels in the third quarter.
STRs for the company`s flagship premium light brands were up 1.4 percent
(+3.0% unadjusted) versus the prior year. Coors Light STRs increased an
impressive 6.8 percent (+8.5% unadjusted), due to gains in both
distribution and velocity, while Miller Lite STRs decreased 3.6 percent
(-2.1% unadjusted), due to volume declines in the Midwest and Pacific
regions as the brand cycled a difficult volume comparison in the prior
year.
The craft and import portfolio rose 5.0 percent (+6.6% unadjusted), led
by the strong performance of Blue Moon, Leinenkugel`s and Peroni Nastro
Azzurro. The domestic above-premium portfolio, which includes Miller
Chill, Sparks and Killian`s Irish Red, experienced a double-digit
decline as Miller Chill cycled tough comparatives from the previous
year, while facing a new competitive entry to the category.
Other premium brands grew 0.2 percent (+1.8% unadjusted) as Coors
Banquet delivered double-digit growth offsetting Miller Genuine Draft
declines. Below premium brands grew 2.3 percent (+3.9% unadjusted) as
Keystone Light posted double-digit gains and Miller High Life continued
to generate solid growth.
MGD 64 showed strength ahead of expectations as consumers and retailers
responded favourably to the national launch of this innovative premium
light beer. During its roll-out in the third quarter, MGD 64 gained
traction across the country as STRs rose 77 percent versus MGD Light
volume a year earlier.
THIRD QUARTER FINANCIAL HIGHLIGHTS
(All amounts are in U.S. Dollars and calculated in accordance with U.S.
GAAP, unless otherwise indicated.)
- Total net sales increased 2.1 percent to $1.950 billion
- Underlying net income, excluding special items, increased 28.2 percent
to $191 million
- Domestic net revenue per barrel increased by 2.9 percent
- Cost of goods sold (COGS) per barrel increased by 5.6 percent
- Marketing, general and administrative costs decreased by 9.1 percent
MillerCoors total net sales increased by 2.1 percent to $1.950 billion
versus the prior period pro forma results. Excluding contract brewing,
net sales were up 2.3 percent to $1.818 billion. Third-party contract
brewing volumes decreased 3.3 percent.
Pricing remained strong as total company net sales per barrel increased
3.0 percent. Excluding contract brewing, net sales per barrel grew at
2.9 percent versus the prior year pro forma results, driven by strong
pricing. MillerCoors revenue growth outlook for the balance of the year
is expected to remain strong, as the company implemented selective price
increases on the majority of its beer volume in September and October
this year. Net sales mix was virtually unchanged, due to strong growth
by the company`s premium light, craft and import brands, largely offset
by cycling significant Miller Chill launch ramp-up volumes in the prior
year.
COGS per barrel increased by 5.6 percent, as reductions related to
legacy savings initiatives by Miller Brewing Company (Project Unicorn)
and Coors Brewing Company (Resources for Growth) were more than offset
by increased commodity and fuel costs.
Marketing, general and administrative expense decreased 9.1 percent
reflecting favourability due to the non-recurrence of prior year Miller
Chill launch costs, which were partially offset by MGD 64 launch costs,
as well as a reduction in share based compensation expenses.
Underlying net income, excluding special items, for the quarter
increased to US $191 million, up 28.2 percent from the prior year pro
forma result, driven primarily by strong pricing and reductions in
marketing and overhead expenses, which more than offset increases in
COGS and the reduction in shipment volume. Depreciation and
amortization expense for MillerCoors in the third quarter was
approximately $70 million, and additions to properties and intangible
assets totalled $67 million.
COST SYNERGIES
MillerCoors is aggressively working to deliver against its stated goal
of achieving $500 million of cost synergies in the first three years of
combined operations commencing July 1, 2008. The company plans to
deliver its initial commitment of $50 million of cost synergies in the
first year of combined operations ending June 30, 2009. These savings
will be divided approximately evenly between the second half of 2008 and
the first half of 2009. In addition, MillerCoors is on track to deliver
$350 million of savings in year two with approximately $175 million
delivered in the second half of 2009. The remaining $100 million of
savings will be delivered in year three ending June 30, 2011.
In the third quarter, MillerCoors began its brewery network optimization
project to shift volume and brew both Miller and Coors products
throughout its expanded network of eight major breweries. The projects
will be phased in at the breweries over the next 18 months. The moves
will reduce shipping distances which will drive products to market
quicker, generating significant savings. The company continues to
integrate its information systems to enable robust data sharing and
analysis within the commercial enterprise, further minimize duplicate
systems and reduce costs. The MillerCoors employee selection process is
nearing completion, and the full sales organization selection process
will be completed in early November.
During the third quarter 2008, MillerCoors reported special or
exceptional items of $22.6 million related to one-time integration
costs. Incurring these costs will enable MillerCoors to capture
organizational synergies, as part of its stated $500 million three-year
synergy savings plan. The third quarter 2007 pro forma results include
special items of $2.8 million relating to a one-time charge for supply
chain restructuring in the Legacy Coors organization.
Overview of MillerCoors
MillerCoors produces, markets and sells the MillerCoors portfolio of
brands in the U.S. and Puerto Rico.
Built on a foundation of great beer brands and more than 288 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, MillerCoors has a
broad portfolio of highly complementary brands across every major
industry segment. Miller Lite is the great-tasting beer that
established the American light beer category in 1975, and Coors Light is
the brand that introduced consumers to Rocky Mountain cold refreshment.
MillerCoors brews full-calorie beers Coors Original Banquet and Miller
Genuine Draft; and economy brands Miller High Life and Keystone Light.
The company also imports Peroni Nastro Azzurro, Pilsner Urquell and
Molson Canadian and offers innovative products such as Miller Chill and
the Sparks line of caffeinated alcohol beverages. MillerCoors features
craft brews from the Jacob Leinenkugel Company, Blue Moon Brewing
Company and the Blitz-Weinhard Brewing Company. 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 vision is to become the best beer company in
America by driving profitable industry growth. 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.
Overview of SABMiller
SABMiller plc is one of the world`s largest brewers with brewing
interests or distribution agreements across six continents. The group`s
brands include premium international beers such as Miller Genuine Draft,
Peroni Nastro Azzurro, Grolsch and Pilsner Urquell, as well as an
exceptional range of market leading local brands. Outside the USA,
SABMiller plc is also one of the largest bottlers of Coca-Cola products
in the world. In the year ended March 31, 2008, the group reported
$3,560 million operating profit before exceptional items and revenue of
$21,410 million. SABMiller plc is listed on the London and Johannesburg
stock exchanges. For more information on SABMiller plc, visit the
company`s website: www.sabmiller.com.
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, Molson Dry, Carling, Coors, and
Keystone Light in North America, Europe and Asia. For more information
on Molson Coors Brewing Company, visit the company`s web site,
http://www.molsoncoors.com.
MILLERCOORS LLC
RESULTS OF OPERATIONS
(VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS)
(UNAUDITED)
Three Months Ended
September September
30, 2008 30, 2007
Actual Pro forma
adjusted
Volume in barrels 18,646 18,808
$ $
Sales 2,293.4 2,249.9
Excise taxes (343.7) (341.2)
Net sales 1,949.7 1,908.7
Cost of goods sold (1,236.9) (1,181.8)
Gross profit 712.8 726.9
Marketing, general and administrative
expenses (519.1) (571.0)
Special items, net (22.6) (2.8)
Operating income 171.1 153.1
Other income (expense), net 2.3 (1.5)
Income from continuing operations
before income taxes and minority 173.4 151.6
interests
Income tax expense (1.9) -
Income from continuing operations
before minority interests 171.5 151.6
Minority interests (3.3) (5.6)
$ $
Net Income 168.2 146.0
MillerCoors Results and Related Reconciliations
The tables below reconcile MillerCoors net income reported in accordance
with US GAAP as used for inclusion within Molson Coors reported results
to MillerCoors EBITA as used for inclusion within SABMiller`s reported
results. 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. Prior year results are
presented on a pro forma basis. Adjustments have been made to reflect
comparative data including amortization of definite life intangible
assets and the exclusion of significant one-time items.
MillerCoors Reconciliation of US GAAP Net Income to Underlying Net
Income (non-GAAP measure)
And to EBITA, calculated under IFRS
MillerCoors
(In Millions of $US) Third Quarter Ended
September September
30, 2008 30, 2007
Actual Pro forma-
adjusted
U.S. GAAP: Net Income 168 146
Plus: Special Items 23 3
Non-GAAP: Underlying Net Income 191 149
Plus: AdjustmentsSquared 22 36
MillerCoors underlying earnings before 213 185
interest, taxes and amortization and before
exceptional items (EBITACubed)
Percent change vs. prior year MillerCoors 15.1%
pro-forma underlying EBITACubed
Notes:
1. Special items include one-time integration charges related to
the MillerCoors Joint Venture.
2. US - GAAP Underlying Net Income to EBITA adjustments relate to
differing treatment of step-up depreciation, pension and post-
retirement benefits, consolidation of container joint ventures,
share based compensation, and severance expenses between US - GAAP
and IFRS. Amortizations of intangible assets, interest, taxes and
minority interests have been added back to arrive at underlying
EBITA.
3. EBITA - Earnings Before Interest, Taxes, and Amortization, and
before exceptional items.
This announcement is for information only and does not constitute an
offer or an invitation to acquire or dispose of any securities or
investment advice or an inducement to enter into investment activity.
This announcement does not constitute an offer to sell or issue or the
solicitation of an offer to buy or acquire the securities of SABMiller
or Molson Coors (the "Companies") in any jurisdiction.
The distribution of this announcement may be restricted by law. Persons
into whose possession this announcement comes are required by the
Companies to inform themselves about and to observe any such
restrictions.
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 review.
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, 2008, 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. 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.
Contacts
For further information, please contact:
SABMiller :
Tel: +44 20 7659 0100/ 414 931 2000
Nigel Fairbrass, Media Relations, SABMiller Mob: +44 7799 894265
Gary Leibowitz, Investor Relations, SABMillerMob: +44 7717 428540
Molson Coors :
Paul de la Plante, Media Relations, Molson Coors: 514/590-6349
Dave Dunnewald , Investor Relations, Molson Coors: 303/279-6565
Leah Ramsey, Investor Relations, Molson Coors: 303/279-6565
Date: 05/11/2008 09:38:02 Produced by the JSE SENS Department.
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