| Wed 4 Nov 2009, 14:18 | | SAB - SABMiller And Molson Coors Report Double-Digit Quarterly Earnings |
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SAB
SOSAB
SAB - SABMiller And Molson Coors Report Double-Digit Quarterly Earnings
Growth For Millercoors
SABMiller Plc
JSEALPHA CODE : SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
SABMILLER AND MOLSON COORS REPORT DOUBLE-DIGIT QUARTERLY EARNINGS GROWTH FOR
MILLERCOORS
Brewer Delivers Strong Underlying Profit Growth Despite Challenging Economic
and Industry Conditions
November 4, 2009 (London and Denver) - Driven by strong 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 for the quarter ended September 30, 2009.
"We are delivering our synergies, controlling costs and managing revenue for
sustainable profit growth," said MillerCoors CEO Leo Kiely. "In this
challenging economic environment, we`re also realizing the benefit of a well
balanced portfolio that offers consumers choice and variety in all segments."
Key operating results for the third quarter are compared to the prior year
quarter and include MillerCoors operations in the U.S. and Puerto Rico.
THIRD QUARTER 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 28.1% to $244.4 million versus the prior year comparable quarter
Total net revenue increased 3.1% to $2.01 billion
Domestic net revenue per barrel increased 3.7%
Cost of goods sold (COGS) per barrel increased 3.5%
$73 million delivered in cost synergies versus the prior year comparable
quarter, bringing year-to-date synergy total to $183 million and cumulative
synergies since July 1, 2008, to $211 million
Marketing, general and administrative costs decreased 4.5%
MillerCoors domestic sales-to-retailers (STRs) were down 1.3 percent due to a
slight decline in premium light volumes and continued softness in above
premium and premium brands. Domestic sales-to-wholesalers (STWs) fell 0.7
percent, primarily driven by lower retail sales.
Pricing remained strong in the third quarter, as domestic net revenue per
barrel, excluding contract brewing and company-owned distributor sales,
increased 3.7 percent driven by sustained price increases taken in the fall
of 2008 and reductions in discount activity.
Premium light brand volumes (Miller Lite, Coors Light, MGD 64) were down low-
single digits largely due to a decline in Miller Lite, which was partially
offset by MGD 64 growth. Miller Lite STRs were down mid-single digits and
Coors Light STRs were down slightly.
MGD 64 continued to perform well ahead of expectations, achieving STRs of
nearly three quarters of a million barrels year to date.
In a challenging market, MillerCoors craft and import portfolio grew slightly
during the quarter, led by high-single-digit growth of Blue Moon and low-
single-digit growth of Peroni Nastro Azzurro. The domestic above-premium
portfolio - which includes Miller Chill, Sparks and Killian`s Irish Red -
experienced a double-digit decline.
The below premium portfolio was up low-single digits, largely due to the
strong performance of Keystone Light and continued growth of Miller High
Life, which more than offset declines in Milwaukee`s Best. The premium
regular portfolio - which includes MGD and Coors Banquet - was down double
digits.
MillerCoors total net revenue increased 3.1 percent to $2.01 billion versus
the prior year comparable quarter, driven by domestic net pricing. Excluding
contract brewing and company-owned distributor sales, domestic net revenue
increased 3.0 percent to $1.87 billion. Third-party contract brewing volumes
declined 4.6 percent, though profits were up slightly from the prior-year
comparable quarter.
Cost of goods sold per barrel increased 3.5 percent as benefits from
MillerCoors cost leadership programs were more than offset by brewing and
packaging materials cost increases under procurement contracts largely
arranged prior to more recent commodity market price reductions.
Marketing, general and administrative costs decreased 4.5 percent, driven
primarily by lower organizational costs and synergies, which were partially
offset by IT integration-related expenses.
For the quarter, underlying net income attributable to MillerCoors (excluding
special items) increased 28.1 percent to $244.4 million versus the prior-year
comparable quarter.
Depreciation and amortization expenses for MillerCoors in the third quarter
were $72.9 million and additions to tangible and intangible assets totaled
$79.5 million.
During the third quarter of 2009, MillerCoors reported special charges
totaling $14.7 million, which include pension curtailment and integration
expenses.
INTEGRATION AND COST SYNERGIES
MillerCoors achieved $73 million in synergies in the third quarter largely
due to marketing synergies, as well as organizational savings resulting from
the elimination of duplicate and transitional positions in the third quarter
2008. Network optimization savings continue to be realized from shifting
production of Coors and Miller brands into the larger MillerCoors brewery
network, a process which will continue for the next nine months. MillerCoors
continues to integrate business processes and systems across the enterprise
to deliver enhanced customer solutions and better leverage the scale of the
business.
MillerCoors has delivered $183 million in synergies this year, bringing the
total to $211 million since beginning operations on July 1, 2008. The
company now expects to achieve $270 million of cumulative synergies by the
end of calendar year 2009, surpassing its original commitment of $225
million. As previously communicated, MillerCoors will deliver incremental
cost savings above its $500 million synergy target and approximately $200
million in cost savings are expected to be delivered by the end of 2012,
approximately in line with current market expectations. These cost savings
include efficiencies in production costs, procurement, and marketing, general
and administrative expense.
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 create
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 in accordance with IFRS. 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 for the first six
months are presented on a pro forma basis. Adjustments have been made to
reflect comparative data including amortization of definite life intangible
assets
MillerCoors Reconciliation of US GAAP Net Income to Underlying Net Income
(non-GAAP measure) and to EBITA, calculated under IFRS, noting that first
half 2008 numbers are Pro Forma.
MillerCoors
Three Months Nine Months
Ended Ended
(In millions of $US) Sept 30, Sept Sept Sept
2009 30, 30, 30,
2008 2009 2008
US -GAAP: Net Income 229.7 168.2 740.6 479.4
Plus: Special items1 14.7 22.6 45.5 138.7
Non - GAAP Underlying Net 244.4 190.8 786.1 618.1
Income
Plus: Adjustments to 45.2 21.8 106.5 73.4
arrive at IFRS Underlying
EBITA2
IFRS: MillerCoors underlying earnings 289.6 212.6 892.6 691.5
before interest, taxes and
amortization before exceptional items
(EBITA3 )
Percent change vs. prior year 36.2% 29.1%
MillerCoors pro-forma underlying
EBITA3
1 Current year special items include integration charges related to the
MillerCoors Joint Venture, and charges for pension curtailment. Prior
year special items include integration charges, asset impairment charges,
and a loss on sale of a company owned distributorship.
2 US - 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, asset disposal,
deferred taxes, 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.
3 EBITA - 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 Nine Months Ended
Sept 30, Sept 30, Sept 30, 2009 Sept 30,
2009 2008 2008
Actual Actual Actual Pro Forma
Volume in 18,441 18,646 53,687 54,539
barrels
Sales 2,350.7 2,293.4 6,855.8 6,710.2
Excise Taxes (341.2) (343.7) (993.7) (1,004.1)
Net Sales
2,009.5 1,949.7 5,862.1 5,706.1
Cost of Goods (1,266.6) (1,236.9) (3,618.8) (3,513.7)
Sold
Gross profit 742.9 712.8 2,243.3 2,192.4
Marketing,
General and (496.0) (519.1) (1,438.4) (1,566.2)
Administrative
Expenses
Special Items (14.7) (22.6) (45.5) (138.7)
(net)
Operating 232.2 171.1 759.4 487.5
Income
Other Income 2.3 2.3 1.6 7.1
(Expense), net
Income before
Income Taxes and 234.5 173.4 761.0 494.6
Minority
Interests
Income Tax (2.3) (1.9) (6.9) (1.9)
Expense
Net Income 232.2 171.5 754.1 492.7
Net income
attributable to (2.5) (3.3) (13.5) (13.3)
Non-controlling
interest
Net Income
Attributable to 229.7 168.2 740.6 479.4
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: 04/11/2009 14:18:18 Produced by the JSE SENS Department.
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