| Wed 3 Nov 2010, 13:00 | | SAB - SABMillier Plc - Millercoors reports double-digit underlying profit |
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SAB
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SAB - SABMillier Plc - Millercoors reports double-digit underlying profit
growth in third quarter
SABMillier Plc
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
MILLERCOORS REPORTS DOUBLE-DIGIT UNDERLYING PROFIT GROWTH IN THIRD QUARTER
Brewer Drives Strong Cost Management, Favorable Pricing in
Tough Economic Environment
November 3, 2010 (London and Denver) - SABMiller plc (SAB.L) and Molson Coors
Brewing Company (NYSE: TAP; TSX) today reported MillerCoors underlying
earnings grew at a double digit rate driven by strong cost management and
net pricing, which were offset by soft volumes due to a sluggish U.S. beer
market in the third quarter ended September 30, 2010.
MillerCoors third quarter underlying net income, excluding special items,
increased 36.7 percent to $334 million versus the prior year comparable
quarter last year.
"It is still a tough market environment, but we are encouraged by our recent
premium light trends and the continued strong momentum of our Tenth and Blake
portfolio," said Leo Kiely, chief executive officer, MillerCoors. "We
successfully achieved positive net revenue growth for the quarter and we
delivered on our commitment to take our synergy and other cost savings to the
bottom line. Investing behind innovation on our focus brands was also key to
our success this summer."
Key operating results for the third quarter are compared to the prior year
comparable 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 (excluding special items) increased 36.7% to $334
million;
- Total net revenue increased 0.3% to $2.016 billion;
- Domestic net revenue per barrel (NRPB), excluding contract brewing and
company-owned distributor sales, increased 2.4%;
- Cost of goods sold per barrel decreased 0.3%;
- Synergies and other cost savings were $83 million, bringing cumulative
synergies and cost savings (including legacy cost savings programs) to
$564 million since July 1, 2008.
MillerCoors domestic sales-to-retailers (STRs) declined 4.0 percent. Domestic
sales-to-wholesales (STWs) declined 2.7 percent in the third quarter.
Third Quarter Brand STR Highlights
In the Premium Light portfolio, both Coors Light and Miller Lite volumes were
down low-single digits. Notably, Miller Lite trends have continued to
stabilize since the launch of the Miller Lite Vortex bottle. MGD 64 declined
at a double-digit rate.
The Tenth and Blake Craft and Import portfolio grew double-digits in the
quarter, driven by double-digit-growth of Blue Moon and high-single-digit-
growth of Leinenkugel`s resulting from our recent "craft beer can" innovation
and the success of seasonal brews. The Premium Regular and smaller domestic
Above Premium portfolios experienced double-digit declines.
The Below Premium portfolio was down mid-single digits due to declines in
Miller High Life and Milwaukee`s Best. Keystone Light volumes were level
with the prior year.
Third Quarter Financial Highlights
Total company net producer revenue per barrel increased in the third quarter
by 3.3 percent to $112.53 driven by domestic revenue growth. Excluding
contract brewing and company-owned distributor sales, domestic net revenue
increased to $1.867 billion, with NRPB up 2.4 percent, driven by firm net
pricing and favorable sales mix. Third-party contract brewing volumes were
down 4.8 percent.
Third quarter cost of goods sold (COGS) per barrel decreased slightly (0.3%)
versus the prior year primarily due to procurement synergies realized across
the supply chain.
Marketing, general and administrative costs decreased 9.8 percent largely due
to synergies and other cost savings realized.
Depreciation and amortization expenses for MillerCoors in the third quarter
were $72 million and additions to tangible and intangible assets totaled $50
million.
Special items for the quarter totaled $21 million in special charges, $6
million higher than in the prior year, driven largely by pension and post-
retirement benefit curtailment expenses, and integration costs including
severance costs resulting from the sales office reorganization.
Integration, Synergies and Cost Savings
In the third quarter, MillerCoors successfully completed initial product
transitions within its national brewery network. The company will continue to
focus on further network optimization through peak/non-peak season sourcing
changes, as well as opportunities for increased efficiencies.
MillerCoors remains on track to deliver $750 million in total synergies and
other cost savings by the end of 2012. In the third quarter, MillerCoors
delivered total cost reductions of $83 million comprising $56 million in
synergies and $27 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 annualized synergy and other cost savings since July 1, 2008, now stand
at $564 million, made up of $50 million in Resources for Growth (RFG) and
Unicorn cost initiatives, $445 million in synergies and $69 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
nearly 300 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 offers innovative products such as
MGD 64, Miller Chill and Sparks. Through its new craft and import company,
Tenth and Blake, the company imports Peroni Nastro Azzurro, Pilsner Urquell,
Grolsch and Molson Canadian and 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.
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
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 Nine Months Ended
Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2010 2009 2010 2009
US -GAAP: Net Income $313.0 $229.7 $912.8 $740.6
attributable to
MillerCoors
Plus: Special items (1) 21.0 14.7 28.1 45.5
Non - GAAP Underlying 334.0 244.4 940.9 786.1
Net Income
Plus: Adjustments to 47.7 45.2 103.7 106.5
arrive at IFRS
Underlying EBITA (2)
IFRS: MillerCoors underlying $381.7 $289.6 $1,044.6. $892.6
earnings before interest,
taxes and amortization
before exceptional items
(EBITA (3))
Percent change vs. prior 31.8% 17.0%
year MillerCoors underlying
EBITACubed
(1) Current year and prior year special items include pension and
postretirement benefit curtailments and 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, share based compensation and severance expenses between
US - GAAP and IFRS. Amortization of intangible assets, Interest, Taxes,
Equity Income and Non-controlling interests 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)
US GAAP Three Months Ended Nine Months Ended
Sept 30, Sept 30, Sept 30, Sept 30, 2009
2010 2009 2010
Volume in barrels 17,914 18,441 52,124 53,687
$2,350.2 $2,350.7 $6,819.8 $6,855.8
Sales
(334.3) (341.2) (968.9) (993.7)
Excise Taxes
Net Sales 2,015.9 2,009.5 5,850.9 5,862.1
Cost of Goods Sold (1,226.7) (1,266.6) (3,590.1) (3,618.8)
Gross Profit 789.2 742.9 2,260.8 2,243.3
Marketing, General (447.4) (496.0) (1,302.6) (1,438.4)
and Administrative
Expenses
Special Items, net (21.0) (14.7) (28.1) (45.5)
Operating Income 320.8 232.2 930.1 759.4
Other Income 0.2 2.3 3.5 1.6
(Expense), net
Income Before 321.0 234.5 933.6 761.0
Income Taxes and
Non-controlling
Interests
Income Tax Expense (2.1) (2.3) (5.9) (6.9)
Net Income 318.9 232.2 927.7 754.1
Net Income (5.9) (2.5) (14.9) (13.5)
Attributable to
Non-controlling
Interests
Net Income $313.0 $229.7 $912.8 $740.6
Attributable to
MillerCoors LLC
Date: 03/11/2010 13:00:01 Produced by the JSE SENS Department.
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