| Mon 3 Aug 2009, 13:00 | | SAB - SABMiller Plc - SABMiller And Molson Coors Report Higher Millercoors |
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SAB
SOSAB
SAB - SABMiller Plc - SABMiller And Molson Coors Report Higher Millercoors
Second Quarter Earnings
SABMiller plc
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
SABMILLER AND MOLSON COORS REPORT HIGHER MILLERCOORS SECOND QUARTER EARNINGS
MillerCoors Delivers Four Consecutive Quarters of Double-Digit Underlying
Profit Growth
Since Beginning Combined Operations July 2008
August 3, 2009 (London and Denver) - Driven by strong net revenue growth, cost
management and continued synergy delivery, SABMiller plc (SAB.L) and Molson
Coors Brewing Company (NYSE: TAP; TSX) today reported double-digit profit
growth for MillerCoors on a pro forma basis for the quarter ended June 30,
2009.
"Since combining operations last July, we have achieved double-digit growth in
underlying earnings for four consecutive quarters," said MillerCoors CEO Leo
Kiely. "These results show MillerCoors is connecting consumers with its new
brand portfolio and effectively driving synergies to become stronger and more
competitive in the U.S. beer industry."
"We have grown five of our six national focus brands in the past year. This
demonstrates the power of our portfolio to drive profitable growth in this
challenging economic environment," added Kiely.
Key operating results for the second quarter are compared to the prior year on
a pro forma basis1 and include MillerCoors operations in the U.S. and Puerto
Rico.
SECOND QUARTER HIGHLIGHTS
(All amounts are in U.S. dollars and calculated in accordance with U.S. GAAP,
unless otherwise indicated.)
- Six national focus brandsSquared increased sales-to-retailers by 1.3%,
led by Coors Light and MGD 64
- Underlying net income, excluding special items, increased by 16.4% to
$325.3 million
- Total net sales increased by 1.6% to $2.14 billion
- Domestic net revenue per barrel increased by 3.0%
- $60 million delivered in synergies, bringing year-to-date synergy total
to $110 million
In a soft beer market, MillerCoors domestic sales-to-retailers (STRs) were
down 0.8 percent versus the prior year pro forma quarter due to a decline in
Miller Lite STRs and softness in above premium brands, mostly offset by
positive results in five of the six national focus brands. Domestic sales-to-
wholesalers (STWs) declined 1.1 percent driven by lower STRs and a slight
reduction in distributor inventories.
Pricing remained strong in the second quarter as domestic net sales per
barrel, excluding contract brewing and company-owned distributor sales,
increased by 3.0 percent based on 2008 price increases.
Overall, premium light brand volumes (Miller Lite, Coors Light, MGD 64) were
down slightly as current economic challenges continue to result in trade-down
in the off-premise channel and ongoing softness in the on-premise channel.
Coors Light was up low-single digits versus prior year driven in part by
distribution gains. Miller Lite STRs were down mid-single digits due in part
to the reduction of price promotions, trade-down from the premium-and-above
categories and weakness in the on-premise channel.
MGD 64 continued to accelerate since its national launch in fall 2008. The
MGD franchise has remained in growth after its positive performance for the
first time in over a decade during the first quarter.
The craft and import portfolio grew slightly during the quarter, driven by
Blue Moon and Leinenkugel`s. Peroni Nastro Azzurro was virtually unchanged in
a challenged import market. The domestic above-premium portfolio, which
includes Miller Chill, Sparks and Killian`s Irish Red experienced a double-
digit decline.
Coors Banquet continued to generate good growth, but the premium regular
portfolio, which includes Miller Genuine Draft, was down high-single digits.
The below-premium portfolio was up low-single digits as double-digit growth by
Keystone Light and low-single-digit growth by Miller High Life more than
offset the mid-single digit decline by Milwaukee`s Best.
SECOND 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 16.4% to $325.3 million versus the prior pro forma
quarter
- Total net sales increased by 1.6% to 2.14 billion
- Domestic net revenue per barrel increased by 3.0%, driven by firm pricing
and reduced discounts, offset by consumer trade-down between industry
segments
- Cost of goods sold (COGS) per barrel increased by 5.1%
- Marketing, general and administrative costs decreased by 10.8% driven
primarily by synergies and other cost savings
MillerCoors total net sales increased by 1.6 percent to $2.14 billion versus
the prior pro forma quarter. Excluding contract brewing and company-owned
distributor sales, net sales increased 1.7 percent to $2.00 billion. Third-
party contract brewing volumes declined 6.5 percent, though profits were in
line with the prior-year comparable quarter.
Though MillerCoors continues to realize supply chain related synergies and
deliver savings from its cost leadership programs, Cost of Goods Sold per
barrel increased by 5.1 percent due to significant prior year hops sales, as
well as increased brewing and packaging material costs this year, primarily
glass, aluminum and barley.
For the quarter, marketing, general and administrative costs decreased by 10.8
percent, driven primarily by synergies and other cost savings.
For the quarter, underlying net income attributable to MillerCoors (excluding
special items) increased by 16.4 percent to $325.3 million versus the prior-
year pro forma quarter. Depreciation and amortization expenses for
MillerCoors in the second quarter was approximately $72million, and additions
to tangible and intangible assets totaled $120 million.
INTEGRATION AND COST SYNERGIES
MillerCoors achieved $60 million in synergies in the second quarter, largely
due to the network optimization savings realized from moving production of the
Coors brands into former Miller breweries, continued realization of
organizational savings, and savings in marketing investment. Year-to-date,
MillerCoors has delivered $110 million in synergies, and MillerCoors now
expects to achieve $260 million of cumulative synergies by the end of calendar
2009 surpassing its original commitment of $225 million. While the timing of
synergy delivery has accelerated, MillerCoors $500 million synergy goal is
unchanged.
During the second quarter of 2009, MillerCoors reported special items totaling
$20.4 million due to a charge for pension curtailment and integration
expenses.
During the key summer selling season, MillerCoors remains focused on driving
the great taste platform of Miller Lite, while accelerating Coors Light growth
with new Rocky Mountain cold refreshment messaging and cold activated
packaging. MillerCoors is also working to add new legal-age drinkers to the
premium light category by driving repeat purchases on MGD 64. As we continue
to see shifts in both segments and channels, we will be leveraging our full
brand portfolio to meet changing consumer and customer needs. Finally,
MillerCoors is committed to driving sustainable net revenue growth.
Footnotes:
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 June 2008, or U.S. GAAP for the fiscal quarter ended
June 2008. Adjustments have been made to reflect comparative data including
amortization of definite-life intangible assets and the exclusion of
significant one-time items.
SquaredMillerCoors six national focus brands are Coors Light, Miller Lite, MGD
64, Blue Moon, Miller High Life and Keystone Light.
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 and
distribution agreements across six continents. The group`s wide portfolio of
brands includes premium international beers such as Grolsch, Miller Genuine
Draft, Peroni Nastro Azzurro and Pilsner Urquell, as well as market-leading
local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. SABMiller
plc is also one of the largest bottlers of Coca-Cola products in the world. In
the year ended March 31, 2009, the group reported $3,405 million adjusted pre-
tax profit and group revenue of $25,302 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.
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, 2009, 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.
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
Three Months Six Months
Ended Ended
(In millions of $US) June 30, June June June
2009 30, 30, 30,
2008 2009 2008
US -GAAP: Net Income 304.9 174.6 510.9 311.2
Plus: Special items 20.4 104.8 30.8 116.1
Non - GAAP Underlying 325.3 279.4 541.7 427.3
Net Income
Plus: Adjustments to 42.6 45.9 61.3 51.6
arrive at IFRS
Underlying EBITASquared
IFRS: MillerCoors 367.9 325.3 603.0 478.9
underlying earnings before
interest, taxes and
amortization before
exceptional items
(EBITACubed )
Percent change vs. prior 13.1% 25.9%
year MillerCoors pro-forma
underlying EBITACubed
Current year special items include one-time integration
charges related to the MillerCoors Joint Venture, and a
charge for pension curtailment. Prior year special items
include one-time integration charges, asset impairment
charges, and a loss on sale of a company owned
distributorship.
SquaredUS - 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 US - GAAP and
IFRS. Amortization 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 OPERATIONS
(VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
Actual Pro Forma Actual Pro Forma
Volume in
barrels 19,547 19,878 35,246 35,891
Sales
2,499.4 2,469.7 4,505.1 4,416.8
Excise Taxes
(362.7) (365.7) (652.5) (660.4)
Net Sales
2,136.7 2,104.0 3,852.6 3,756.4
Cost of Goods
Sold (1,302.3) (1,259.8) (2,352.2) (2,276.8)
Gross
profit 834.4 844.2 1,500.4 1,479.6
Marketing,
General and (500.6) (561.2) (942.4) (1,047.1)
Administrative
Expenses
Special Items
(net) (20.4) (104.8) (30.8) (116.1)
Operating
Income 313.4 178.2 527.2 316.4
Other Income
(Expense), net (0.2) 2.2 (0.7) 4.8
Income
before Income 313.2 180.4 526.5 321.2
Taxes and
Minority
Interests
Income Tax
Expense (2.5) - (4.6) -
Net Income 310.7 180.4 521.9 321.2
Net income
attributable (5.8) (5.8) (11.0) (10.0)
to Non-
controlling
interest
Net Income
Attributable 304.9 174.6 510.9 311.2
to MillerCoors
LLC
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
Colin Wheeler Media Relations, Molson Coors 303/927-2443
Dave Dunnewald Investor Relations, Molson Coors 303/927-2334
Leah Ramsey Investor Relations, Molson Coors 303/927-2397
Date: 03/08/2009 13:00:01 Produced by the JSE SENS Department.
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