| Tue 9 Feb 2010, 14:00 | | SAB - SABMiller Plc - Millercoors delivers strong profit growth and synergies in |
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SAB
SOSAB
SAB - SABMiller Plc - Millercoors delivers strong profit growth and synergies in
2009
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
MILLERCOORS DELIVERS STRONG PROFIT GROWTH AND SYNERGIES IN 2009
DESPITE CHALLENGING FOURTH QUARTER
Brewer Withstands Tough Economy and Softening Industry Conditions in First Full
Year
February 9, 2010 (London and Denver) - Facing a difficult U.S. economy that took
its toll on beer sales in the fourth quarter, SABMiller plc (SAB.L) and Molson
Coors Brewing Company (NYSE: TAP; TSX) nonetheless today reported double-digit
underlying earnings growth for MillerCoors in its first full year of operations
ended December 31, 2009.
MillerCoors full-year underlying net income increased by $138.7 million or 18.4
percent, while fourth quarter underlying net income decreased 21.6 percent to
$106.1 million versus prior year. Softening industry volumes and resulting cost
deleverage were partly offset by pricing, synergies delivery, and reductions in
marketing, general and administrative costs in the fourth quarter.
"It`s tough out there, and we saw the effect of ongoing economic pressure and
unemployment on beer sales, especially in the fourth quarter," said MillerCoors
CEO Leo Kiely. "But we stayed focused on our strategy and invested to grow four
out of our six national focus brands in 2009. Our people made it happen,
delivering strong profit growth and exceeding our synergy commitments in the
midst of a recession."
Key operating results for the fourth quarter are compared to the prior year
quarter and include MillerCoors operations in the U.S. and Puerto Rico.
FOURTH QUARTER AND FULL YEAR HIGHLIGHTS
(All amounts are in U.S. dollars and calculated in accordance with U.S. GAAP,
unless otherwise indicated. Results for the full year are compared to the prior
year on a pro forma basis (1).)
* Underlying net income, excluding special items, decreased 21.6% to $106.1
million versus the prior year comparable quarter, while full-year
underlying net income, excluding special items, increased by $138.7 million
or 18.4%;
* Total net revenue declined by 1.6% to $1.712 billion versus fourth quarter
2008, while full-year total net revenue increased by 1.7% to $7.574
billion;
* Domestic net revenue per barrel (NRPB) increased 2.3% in the fourth
quarter, while full-year domestic NRPB increased 3.7%;
(1) 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 and June 2008, or U.S. GAAP for the fiscal quarter
ended March and 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
Cost of goods sold (COGS) per barrel increased 5.6%, while full-year COGS per
barrel increased 4.8%;
Full-year cost synergies were $245 million, bringing cumulative synergies to
$273 million since July 1, 2008.
In the fourth quarter, MillerCoors domestic sales-to-retailers (STRs) declined
3.6 percent primarily due to poor industry and economic conditions. For the
full-year, STRs were down 1.7 percent.
Fourth quarter sales-to-wholesalers (STWs) declined 4.2 percent driven by lower
retail sales and a reduction in contract brewing volumes. Full-year STWs were
down 1.7 percent.
Pricing remained solid in the fourth quarter, as domestic NRPB, excluding
contract brewing and company-owned distributor sales, increased 2.3 percent.
For the full-year, domestic NRPB increased 3.7 percent.
Fourth Quarter Brand STR Highlights
Fourth quarter premium light brand volumes (Miller Lite, Coors Light, MGD 64)
were down mid-single digits due to declines in Miller Lite and to a lesser
extent Coors Light, which were partially offset by the continued success of MGD
64.
MillerCoors craft and import portfolio fell slightly in the quarter, despite
high-single-digit growth in Blue Moon and low-single digit growth in Peroni
Nastro Azzurro. The domestic above-premium portfolio - which includes Miller
Chill, Sparks and Killian`s Irish Red - continued to experience double-digit
declines.
The below-premium portfolio was down slightly compared to the prior year fourth
quarter despite high-single-digit performance from Keystone Light. Miller High
Life experienced a slight decline, and Milwaukee`s Best was down high-single
digits.
Fourth Quarter Financial Highlights
MillerCoors total net revenue declined by 1.6 percent to $1.712 billion versus
fourth quarter 2008.
Excluding contract brewing and company-owned distributor sales, domestic net
revenue decreased 2.1 percent to $1.585 billion. Third-party contract brewing
volumes declined 4.1 percent versus prior quarter.
COGS per barrel increased 5.6 percent as savings from MillerCoors cost
performance initiatives were more than offset by commodity pricing and
significant increases in brewing and packaging materials, including glass
and aluminum. Additionally, COGS per barrel was impacted by the absorption
of fixed costs, and some variable costs, across lower production volume.
Marketing, general and administrative costs decreased by 2.7 percent
primarily due to synergies and other cost savings. This decrease would
have been approximately 6 percent excluding the significant impact of
increased share-based compensation expense, driven by strong SABMiller
stock price appreciation versus a year ago.
Depreciation and amortization expenses for MillerCoors in the fourth quarter
were $76 million, and additions to tangible and intangible assets totaled $118
million.
During the fourth quarter, MillerCoors reported special charges totaling $3.9
million, which includes relocation and severance expenses relating to the
integration of MillerCoors.
Integration, Synergies and Cost Savings
MillerCoors continues to aggressively optimize production across its
breweries. In the fourth quarter, the company produced 2.1 million barrels
of Coors brands in five out of our eight breweries. The brewery optimization
program will continue to realize synergy commitments over the next few months.
As announced in the third quarter, MillerCoors is on track to deliver $750
million in total synergies and other cost savings by the end of 2012. In the
fourth quarter, MillerCoors delivered $62 million in synergies. For the full
year, synergies were $245 million bringing cumulative synergy realization to
$273 million since July 1, 2008.
In addition to synergies, MillerCoors recently completed the RFG and
Unicorn cost savings programs, which delivered $50 million in cost savings
since July 1, 2008. For the full year, the company realized $26 million in
additional cost savings, toward its $200 million cost savings goal due in
2012.
In total, MillerCoors has delivered $349 million in cumulative synergies and
cost savings since July 1, 2008.
Overview of MillerCoors
MillerCoors brews, 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 289 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 Year Ended
Ended
(In millions of $US) Dec Dec 31, Dec 31, Dec 31, 2008
31, 2008 2009
2009
US -GAAP: Net Income $102. $842.8 $533.6
2 $54.1
Plus: Special items 81.2 49.4 219.9
3.9
Non - GAAP Underlying 106.1 135.3 892.2 753.5
Net Income
Plus: Adjustments to 15.6 141.7 88.9
arrive at IFRS 35.2
Underlying EBITASquared
IFRS: MillerCoors
underlying earnings before $141. $150.9 $1,033. 9 $842.4
interest, taxes and 3
amortization before
exceptional items
(EBITACubed )
Percent change vs. prior (6.4%) 22.7%
year MillerCoors pro-
forma underlying EBITA(3)
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.
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, 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 Year Ended
Dec 31, Dec Dec Dec 31, 2008
2009 31, 31,
2008 2009
Actual Actual Actual Pro Forma
Volume in barrels 15,411 16,091 69,098 70,628
Sales $1,995.8 $2,036.0 $8,851.6 $8,746.2
(283.6)
Excise Taxes (296.3) (1,277.3) (1,300.4)
Net Sales 1,712.2 1,739.7 7,574.3 7,445.8
Cost of Goods Sold (1,102.1) (1,090.0) (4,720.9) (4,602.8)
Gross profit 610.1 649.7 2,853.4 2,843.0
Marketing, General
and Administrative (499.5) (513.5) (1,937.9) (2,079.5)
Expenses
Special Items (3.9) (81.2) (49.4) (219.9)
(net)
Operating Income 106.7 55.0 866.1 543.6
Other Income (0.7) 1.6 0.9 7.7
(Expense), net
Income before
Income Taxes and 106.0 56.6 867.0 551.3
Minority Interests
Income Tax Expense (1.5) (1.4) (8.4) (3.3)
Net Income 104.5 55.2 858.6 548.0
Net income
attributable to (2.3) (1.1) (15.8) (14.4)
Non-controlling
interests
Net Income
Attributable to $102.2 $54.1 $842.8 $533.6
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: 09/02/2010 14:00:02 Produced by the JSE SENS Department.
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