| Tue 5 May 2009, 13:10 | | SAB - SABMiller Plc - SABMILLER and Molson Coors report MILLERCOORS first |
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SAB
SOSAB
SAB - SABMiller Plc - SABMILLER and Molson Coors report MILLERCOORS first
quarter earnings
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
SABMiller plc
SABMILLER AND MOLSON COORS REPORT MILLERCOORS FIRST QUARTER EARNINGS
Accelerated Synergies, Strong Revenue Growth, and Cost Management Drive
Nearly 50% Increase in Underlying Profits despite Continuing Commodity Cost
Pressures
May 5, 2009 (London and Denver) - Based on accelerated synergy delivery,
strong revenue growth, disciplined cost management and timing of marketing
expenditure, SABMiller plc (SAB.L) and Molson Coors Brewing Company (NYSE: TAP;
TSX) today reported increased profits for MillerCoors on a pro forma basis for
the quarter ended March 31, 2009, despite continuing commodity cost pressures.
"We delivered growth on five of our six focus brands, and we increased
profitability through strong pricing growth and reduced price promotions," said
MillerCoors Chief Executive Officer Leo Kiely. "These results demonstrate the
strength of the MillerCoors portfolio in the face of a challenging economy and
intense competition."
BRAND HIGHLIGHTS
Key operating results for the first quarter are compared to the prior year
on a pro forma basis1 and include MillerCoors operations in the U.S. and Puerto
Rico. MillerCoors volumes for the period are reported on a trading-day-adjusted
basis, which reflects one fewer trading day in the quarter versus a year ago.
Five out of six MillerCoors focus brands increased sales-to-retailers (STRs)
in the first quarter:
- Coors Light STRs were up low single digits
- Miller Lite STRs decreased mid single digits, a reduced year-over-year rate
of decline versus the previous quarter
- The continued acceleration of MGD 64 led to volume growth in the Miller
Genuine Draft franchise (up mid single digits) for the first time in a
decade
- The craft and import portfolio rose in the first quarter, as Blue Moon
continued to perform well with STRs up high single digits
- Keystone Light delivered a strong double-digit increase in STRs
- Miller High Life growth accelerated to mid single digits
MillerCoors pro forma figures are based on results for Miller and Coors
reported under either International Financial Reporting Standards (IFRS) for
the fiscal quarter ended March 2008, or U.S. GAAP for the fiscal quarter ended
March 2008. Adjustments have been made to reflect comparative data including
amortization of definite-life intangible assets and the exclusion of significant
one-time items.
MillerCoors domestic STRs increased 0.4 percent versus the prior year pro
forma quarter due to strong results from five of the six focus brands, offset
primarily by declines in Milwaukee`s Best. Domestic sales-to-wholesalers
(STWs) declined 1 percent versus prior year, while total STWs declined 2 percent
driven by a double-digit reduction in contract brewing volumes.
Pricing remained strong in the first quarter as domestic net sales per barrel,
excluding contract brewing and company-owned distributor sales, increased 5.6
percent based on 2008 price increases (in the first and fourth quarters) and
reductions in discounting. Pricing growth was lower than the previous quarter
due to cycling of early 2008 general price increases.
Premium light brand STRs were up slightly versus prior year due to solid growth
of Coors Light and continued acceleration of MGD 64, despite price increases
across the premium light brand segment. Coors Light was up low single digits
versus prior year. Miller Lite STRs were down mid single digits, a reduced
rate of decline versus the previous quarter.
A new marketing campaign for Miller Lite launched in late March focused on
the brand`s long-standing consumer equity associated with the brand`s taste.
Innovative new packaging reinforcing the brand`s taste platform is rolling
out nationwide this month. MGD 64 continued to accelerate since its national
launch in fall 2008. For the quarter, MGD 64 exceeded Miller Genuine Draft
Light volumes versus the prior quarter and drove mid-single-digit growth in
the MGD franchise. Coors Banquet continued to generate good growth.
The craft and import portfolio rose slightly in the quarter, led by the
strong performance of Blue Moon and Peroni Nastro Azzurro, offset by declines in
Pilsner Urquell and Weinhard`s.
The domestic above premium portfolio declined double digits due to lower Miller
Chill volume. The new reformulated 100-calorie Miller Chill featuring new
packaging and advertising is currently rolling out nationwide. The Sparks
franchise continued to generate growth in the first quarter following
reformulation of the product.
The below premium portfolio was up low single digits compared to the prior
year`s first quarter, as the strong performance of Keystone Light and
accelerated growth of Miller High Life more than offset declines in
Milwaukee`s Best and Icehouse.
FIRST QUARTER FINANCIAL HIGHLIGHTS
(All amounts are in U.S. dollars and calculated in accordance with U.S.
GAAP, unless otherwise indicated.)
Underlying net income attributable to MillerCoors, excluding special items,
increased by 46.3% to US$216.4 million
IFRS Underlying EBITA increased by 52.6%
Total net sales increased 3.8% to $1.716 billion
Domestic net revenue per barrel increased by 5.6%
Cost of goods sold (COGS) per barrel increased by 5.3%
Marketing, general and administrative costs decreased by 9.1%, driven in
part by marketing expenditure timing and synergy delivery
MillerCoors total net sales increased by 3.8 percent to $1.716 billion
versus the prior pro forma quarter. Excluding contract brewing and company-
owned distributor sales, net sales increased 4.5 percent to $1.609 billion.
Third-party contract brewing volumes declined 10 percent, though profits from
contract brewing increased slightly.
Though MillerCoors continues to realize supply chain related synergies and
deliver savings from its cost leadership programs - Resources for Growth and
Project Unicorn - Cost of Goods Sold (COGS) per barrel increased by 5.3 percent
due to significant increases in brewing and packaging materials related to high
commodity costs this year.
For the quarter, marketing, general and administrative costs decreased by
9.1 percent driven by timing and management of marketing and sales spending
and the accelerated timing of synergy delivery.
For the quarter, net income attributable to MillerCoors (excluding special
items) is $68.5 million ahead of the prior pro forma quarter.Depreciation
and amortization expense for MillerCoors in the first quarter was approximately
$71 million and additions to tangible and intangible assets totalled $97
million.
INTEGRATION AND COST SYNERGIES
The integration of MillerCoors business processes and systems to enable
faster local decision-making and streamlining of costs is proceeding well.The
MillerCoors network optimization project is ahead of schedule, as more than 60
percent of the planned brewing production relocations were completed by April
1, 2009.Finally, construction of the new MillerCoors Chicago corporate
headquarters is nearing completion with an expected occupancy date in the third
quarter of 2009.
MillerCoors further accelerated synergy delivery timing, realizing $50.1
million in the first quarter, which captures some savings originally planned
for delivery in the second quarter. A total of $78.4 million in synergy savings
has been realized since July 1, 2008, exceeding the company`s original goal of
$50 million for the first 12 months of operations. The company now expects to
realize $128 million of synergies by June 30, 2009.
By the end of calendar year 2009, MillerCoors expects to achieve a total of $238
million in synergies, surpassing its original forecast of $225 million. While
the timing of synergy delivery has accelerated, MillerCoors $500 million synergy
goal is unchanged.
During the first quarter of 2009, MillerCoors reported special items totaling
$10.4 million due to employee relocation and retention expenses relating to
the formation of the company.
As demonstrated in the first quarter, MillerCoors will continue to execute
net revenue management strategies that drive the size and value of the beer
category, creating strong brand positions for the long term. The company
plans to execute strong marketing programs in national chains to create
profitable growth opportunities for the upcoming key summer selling season.
Finally, MillerCoors continues to pursue strong cost management and is well
on its way to deliver its stated synergies goal of $500 million in three years.
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 premium beers
Coors Banquet and Miller Genuine Draft; and economy brands Miller High Life
and Keystone Light. The company also imports Peroni Nastro Azzurro, Pilsner
Urquell, Grolsch and Molson Canadian and offers innovative products such as
Miller Chill and Sparks. MillerCoors features craft brews from the Jacob
Leinenkugel Brewing 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 $3,639 million adjusted pre-tax profit 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 Banquet 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 Results and Related Reconciliations
The table below reconciles net income attributable to MillerCoors, 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, noting that 2008 numbers are Pro Forma.
MillerCoors
1st Quarter
Ended
(In millions of $US) March March
31, 31,
2009 2008
US -GAAP: Net Income attributable to 137
MillerCoors 206
Plus: Special (Exceptional) items 10 11
Non - GAAP Underlying Net Income 216 148
attributable to MillerCoors
Plus: Adjustments to IFRS Underlying 19 6
EBITASquared
IFRS: MillerCoors underlying earnings 235 154
before interest, taxes and amortization
before exceptional items (EBITACubed )
Percent change vs. prior year MillerCoors 52.6%
pro-forma underlying EBITACubed
Special, or Exceptional items include one-
time integration charges related to the
MillerCoors Joint Venture
SquaredUS - GAAP Underlying Net Income
attributable to MillerCoors 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 US - GAAP and IFRS. Amortizations
of intangible assets, Interest, Taxes,
Equity Income, and Minority interest have
been removed to arrive at underlying EBITA.
CubedEBITA - Earnings Before Interest,
Taxes, and Amortization, excluding
exceptional items.
These financial results are not necessarily indicative of the results for
Molson Coors Brewing Company or SABMiller plc for the comparable periods.
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.
MILLERCOORS LLC
RESULTS OF OEPRATIONS
(VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS)
(UNAUDITED)
Three Months Ended
March 31, March 31,
2009 2008
Actual Pro Forma
Volume in barrels
15,699 16,013
Sales
2,005.7 1,947.1
Excise Taxes
(289.8) (294.7)
Net Sales
1,715.9 1,652.4
Cost of Goods Sold
(1,049.9) (1,017.0)
Gross profit
666.0 635.4
Marketing, General and
Administrative Expenses (441.8) (485.9)
Special Items (net)
(10.4) (11.3)
Operating Income
213.8 138.2
Other Income (Expense), net
(0.5) 2.6
Income before Income Taxes
and Non-controlling Interests 213.3 140.8
Income Tax Expense
(2.1) -
Net Income
211.2 140.8
Net income attributable to Non- (4.2)
controlling interests (5.2)
Net Income attributable to
MillerCoors 206.0 136.6
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, SABMiller Mob: +44 7717 428540
Molson Coors
Paul de la Plante Media Relations, Molson Coors 514/843-2332
Dave Dunnewald Investor Relations, Molson Coors 303/927-2334
Jane Armstrong Investor Relations, Molson Coors 303/927-2394
Date: 05/05/2009 13:10:01 Produced by the JSE SENS Department.
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