| Tue 4 May 2010, 13:00 | | SAB - SAB Miller - Millercoors reports underlying earnings growth for first |
|
SAB
SOSAB
SAB - SAB Miller - Millercoors reports underlying earnings growth for first
quarter
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
MILLERCOORS REPORTS UNDERLYING EARNINGS GROWTH FOR FIRST QUARTER
May 4, 2010 (London and Denver) - Despite a sluggish U.S. beer market driven by
continued economic adversity, SABMiller plc (SAB.L) and Molson Coors Brewing
Company (NYSE: TAP; TSX) reported underlying earnings growth for MillerCoors in
the first quarter ended March 31, 2010.
Underlying net income, excluding special items, increased 0.4 percent to $217.2
million versus the prior year comparable quarter due to favorable pricing,
synergies and cost savings, which were offset by soft volumes, cost deleverage
and commodity cost pressures.
"We successfully grew profit despite a challenging selling environment in the
first quarter," said Leo Kiely, chief executive officer, MillerCoors. "As we
enter the key summer selling season, we`re investing in brand innovation, chain
account focus, execution, quality, and people to win in beer. As we continue to
deal with economic and competitive pressures, we remain focused on building our
brands and managing costs."
Key operating results for the first quarter are compared to the prior year
quarter and include MillerCoors operations in the U.S. and Puerto Rico.
FIRST QUARTER HIGHLIGHTS
(All amounts are in U.S. dollars and calculated in accordance with U.S. GAAP,
unless otherwise indicated. First quarter results are compared to the prior
year comparable quarter.)
* Underlying net income, excluding special items, increased 0.4% to $217.2
million;
* Total net revenue declined by 0.9% to $1.701 billion;
* Domestic net revenue per barrel (NRPB), excluding contract brewing and
company-owned distributor sales, increased 2.1%;
* Cost of goods sold (COGS) per barrel increased 5.9%;
* Synergies and cost savings were $60 million, bringing cumulative synergies
and cost savings (including legacy cost savings programs) to $409 million
since July 1, 2008.
MillerCoors domestic sales-to-retailers (STRs) declined 4.0 percent largely
driven by continued weak economic conditions affecting the entire industry.
Domestic sales-to-wholesalers (STWs) declined 3.6 percent driven primarily by
lower retail sales.
First Quarter Brand STR Highlights
First quarter Premium Lights brand volumes (Miller Lite, Coors Light and MGD 64)
were down mid-single digits due to a high-single-digit decline in Miller Lite
and low-single-digit decline in Coors Light, which were partially offset by the
double-digit growth of MGD 64.
MillerCoors Craft and Import portfolio grew mid-single digits in the quarter,
driven by double-digit growth of Blue Moon and mid-single-digit growth in Peroni
Nastro Azzurro despite a soft import category. The domestic above-premium
portfolio - which includes Sparks - continued to decline at a double-digit rate.
In the premium regular portfolio, Coors Banquet was flat.
The Below Premium portfolio was down low-single digits due primarily to a
decline in Milwaukee`s Best, while Keystone delivered mid-single-digit growth.
First Quarter Financial Highlights
MillerCoors total net revenue declined by 0.9 percent to $1.701 billion.
Excluding contract brewing and company-owned distributor sales, domestic net
revenue decreased 1.6 percent to $1.583 billion, with NRPB up 2.1 percent.
Third-party contract brewing volumes were up 2.8 percent.
Cost of goods sold per barrel increased 5.9 percent driven by increases in
commodity costs, with significant increases in brewing materials (malt and
corn), packaging materials (glass and aluminum), and higher fuel costs. COGS
per barrel continue to be negatively impacted by the absorption of fixed and
semi-variable costs across lower production volumes.
Marketing, general and administrative costs decreased by 9.2 percent primarily
due to the continued realization of synergies.
Depreciation and amortization expenses for MillerCoors in the first quarter were
$71 million, and additions to tangible and intangible assets totaled $115
million. This includes the acquisition of distribution rights from Western
Beverage Distributing of Colorado for $57 million.
During the first quarter, MillerCoors reported special charges totaling $8.6
million, driven largely by voluntary severance and relocation expenses related
to the integration of MillerCoors.
Integration, Synergies and Cost Savings
Supply chain integration continues to proceed on schedule. The brewery
optimization project is nearing completion, as product moves are more than 90
percent complete. The next phase of supply chain integration will include the
realignment of teams in quality, engineering and packaging and manufacturing and
supply chain development.
MillerCoors remains on track to deliver $750 million in total synergies and
other cost savings by the end of 2012. In the first quarter, MillerCoors
delivered total cost reductions of $60 million comprising $53 million in
synergies and $7 million in additional cost savings.
Total cost savings since July 1, 2008, now stand at $409 million, made up of $50
million in Resources for Growth (RFG) and Unicorn cost initiatives, $326 million
in synergies and $33 million in additional cost savings.
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, 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. You should not place
undue reliance on any forward-looking statement. 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.
MillerCoors Reconciliation of US GAAP Net Income to Underlying Net Income (non-
GAAP measure) and to EBITA, calculated under IFRS.
Three Months Ended
MillerCoors
(In millions of $US) March March 31,
31, 2010 2009
US -GAAP: Net Income 208.6 206.0
Plus: Special items(1) 8.6 10.4
Non - GAAP Underlying Net 217.2 216.4
Income
Plus: Adjustments to 28.5 18.7
arrive at IFRS Underlying
EBITA(2)
IFRS: MillerCoors underlying 235.1
earnings before interest, 245.7
taxes and amortization
before exceptional items
(EBITA (3))
Percent change vs. prior 4.5%
year MillerCoors underlying
EBITA (3)
(1)Special items include integration charges related to the MillerCoors
Joint Venture.
(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, severance expenses and share based compensation between US
- GAAP and IFRS. Amortization of intangible assets, Interest, Taxes, and
non controlling interest have been removed to arrive at underlying EBITA.
(3)EBITA - Earnings Before Interest, Taxes, and Amortization, excluding
exceptional items.
MILLERCOORS LLC
RESULTS OF OPERATIONS
(VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS)
(UNAUDITED)
Three Months Ended
March 31, March 31, 2009
2010
Actual Actual
Volume in barrels 15,228 15,699
Sales $1,983.8 $2,005.7
(282.9)
Excise Taxes (289.8)
Net Sales 1,700.9 1,715.9
Cost of Goods Sold (1,078.6) (1,049.9)
Gross profit 622.3 666.0
Marketing, General and
Administrative Expenses (401.2) (441.8)
Special Items (net) (8.6) (10.4)
Operating Income 212.5 213.8
Other Income (Expense), 2.3 (0.5)
net
Income before Income
Taxes 214.8 213.3
Income Tax Expense (1.4) (2.1)
Net Income 213.4 211.2
Net income attributable
to non-controlling (4.8) (5.2)
interests
Net Income attributable
to MillerCoors LLC $208.6 $206.0
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: 04/05/2010 13:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
