| Tue 3 Aug 2010, 13:00 | | SAB - SABMiller Plc - Sales-to-retailer trend improvements show signs of |
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SAB
SOSAB
SAB - SABMiller Plc - Sales-to-retailer trend improvements show signs of
progress behind brand innovation
SABMiller Plc
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
MILLERCOORS ACHIEVES DOUBLE-DIGIT UNDERLYING PROFIT GROWTH IN SECOND QUARTER
Sales-To-Retailer Trend Improvements Show Signs of Progress Behind Brand
Innovation
August 3, 2010 (London and Denver) - Despite volume headwinds which continue to
affect the beer industry at-large, SABMiller plc (SAB.L) and Molson Coors
Brewing Company (NYSE: TAP; TSX) reported double-digit underlying earnings
growth for MillerCoors in the second quarter ended June 30, 2010.
MillerCoors second quarter underlying net income, excluding special items,
increased 19.8 percent to $389.7 million versus the prior year comparable
quarter due to strong innovation, solid price gains, delivery of synergies, and
lower marketing, general and administrative costs, which were partially offset
by soft volumes.
"Now that we`re into the home stretch of the summer selling season, our results
show some positive signs of progress," said Leo Kiely, chief executive officer,
MillerCoors. "We grew profit by double digits in an unfavorable selling
environment. A few of our key brands showed significant trend improvements from
the last quarter, and the craft and import portfolio posted very strong results,
driven by our investments in brand innovation."
Key operating results for the second quarter are compared to the prior year
comparable quarter 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. ) Underlying net income, excluding special items,
increased 19.8% to $389.7 million; Total net revenue declined by 0.1% to $2.134
billion; Domestic net revenue per barrel (NRPB), excluding contract brewing and
company-owned distributor sales, increased 2.8%;Cost of goods sold per barrel
increased 1.6%;
Synergies and other cost savings were $72 million, bringing cumulative synergies
and cost savings (including legacy cost savings programs) to $481 million since
July 1, 2008.
MillerCoors domestic sales-to-retailers (STRs) declined 2.4 percent. Helped by
MillerCoors premium light, craft and import brands, the second quarter showed a
trend improvement from the first quarter, which was down 4.0 percent. Domestic
sales-to-wholesalers (STWs) declined 3.5 percent in the second quarter, driven
primarily by lower STRs.
Second Quarter Brand STR Highlights
In the Premium Light portfolio, Coors Light volumes were unchanged and MGD 64
was down low-single digits, while Miller Lite fell by low single digits and cut
its decline rate by more than half since the last quarter.
MillerCoors Craft and Import portfolio grew double-digits in the quarter, driven
by double-digit-growth of Blue Moon, Leinenkugel`s and Peroni Nastro Azzurro.
The Premium Regular and smaller domestic Above Premium portfolios experienced
double-digit declines.
The Below Premium portfolio was down low-single digits due to Miller High Life
which declined low-single digits and Milwaukee`s Best which decreased at a high-
single-digit rate. Keystone Light grew at a low-single-digit rate partially
offsetting the declines in the Below Premium Portfolio.
Second Quarter Financial Highlights
MillerCoors total net revenue declined 0.1 percent to $2.134 billion versus
second quarter 2009. Excluding contract brewing and company-owned distributor
sales, domestic net revenue decreased 0.8 percent to $1.980 billion, with NRPB
up 2.8 percent, driven by firm net pricing and slightly favorable sales mix.
Third-party contract brewing volumes were up 3.0 percent.
Costs of goods sold per barrel increased 1.6 percent, reflecting a significant
trend improvement versus the first quarter. This increase was driven by higher
freight rates, product mix and increases in promotional packaging, which were
largely offset by the continued delivery of synergies and cost savings.
Marketing, general and administrative costs decreased by 9.3 percent primarily
due to synergies and lower marketing spending.
Depreciation and amortization expenses for MillerCoors in the second quarter
were $71 million, and additions to tangible and intangible assets totaled $58
million.
During the second quarter, special items reflect a benefit of $1.5 million
driven largely by a reduction in estimates for integration costs as a result of
the formation of MillerCoors.
Synergies and Cost Savings
MillerCoors remains on track to deliver $750 million in total synergies and
other cost savings by the end of 2012. In the second quarter, MillerCoors
delivered total cost reductions of $72 million comprising $63.8 million in
synergies and $8.6 million in additional cost savings. These cost reductions
were primarily realized from agency fees, media, regional tactical spending,
inbound and outbound freight; and packaging and brewing materials.
Total synergy and other cost savings since July 1, 2008, now stand at $481
million, made up of $50 million in Resources for Growth (RFG) and Unicorn cost
initiatives, $389 million in synergies and $42 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, Wisconsin, 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 Pilsner Urquell, Peroni
Nastro Azzurro, Miller Genuine Draft and Grolsch, as well as leading local
brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. SABMiller plc is
also one of the world`s largest bottlers of Coca-Cola products. In the year
ended March 31, 2010, the group reported $3,803 million adjusted pre-tax profit
and group revenue of $26,350 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, 2010, 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 LLC
Dollars in Millions Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
US -GAAP: Net Income $391.2 $304.9 $599.8 $510.9
Plus: Special items (1.5) 20.4 7.1 30.8
Non - GAAP Underlying Net 389.7 325.3 606.9 541.7
Income
Plus: Adjustments to 27.5 42.6 56.0 61.3
arrive at IFRS Underlying
EBITASquared
IFRS: MillerCoors $417.2 $367.9 $662.9 $603.0
underlying earnings before
interest, taxes and
amortization before
exceptional items
(EBITACubed )
Percent change vs. prior 13.4% 9.9%
year MillerCoors underlying
EBITACubed
Current year special items include integration charges related to the
MillerCoors Joint Venture. Prior year special items include integration
charges related to the MillerCoors Joint Venture and charges for pension
curtailment.
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 Non-controlling interest have been removed to arrive at
underlying EBITA.
CubedEBITA - Earnings Before Interest, Taxes, and Amortization, excluding
exceptional items.
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,
2010 2009 2010 2009
Volume in barrels 18,982 19,547 34,210 35,246
Sales $2,485.8 $2,499.4 $4,469.6 $4,505.1
Excise Taxes (351.7) (362.7) (634.6) (652.5)
Net Sales 2,134.1 2,136.7 3,835.0 3,852.6
Cost of Goods Sold (1,284.8) (1,302.3) (2,363.4) (2,352.2)
Gross Profit 849.3 834.4 1,471.6 1,500.4
Marketing, General (454.0) (500.6) (855.2) (942.4)
and Administrative
Expenses
Special Items, net 1.5 (20.4) (7.1) (30.8)
Operating Income 396.8 313.4 609.3 527.2
Other Income 1.0 (0.2) 3.3 (0.7)
(Expense), net
Income Before 397.8 313.2 612.6 526.5
Income Taxes and
Non-controlling
Interest
Income Tax Expense (2.4) (2.5) (3.8) (4.6)
Net Income 395.4 310.7 608.8 521.9
Net Income (4.2) (5.8) (9.0) (11.0)
Attributable to
Non-controlling
Interest
Net Income $391.2 $304.9 $599.8 $510.9
Attributable to
MillerCoors LLC
Contacts
For further information, please contact:
SABMiller Tel: +44 20 7659 0100/ 414 931 2000
Jonathan Oates Media Relations, SABMiller Mob: +44 20 7659 0144
Gary Leibowitz Investor Relations, SABMiller Mob: +447717 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: 03/08/2010 13:00:01 Produced by the JSE SENS Department.
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