| Tue 3 May 2011, 13:00 | | SAB - SABMiller plc - MillerCoors increases first quarter profits |
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SAB
SOSAB
SAB - SABMiller plc - MillerCoors increases first quarter profits
SABMiller plc
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
MILLERCOORS INCREASES FIRST QUARTER PROFITS
Brewer Drives Net Revenue Growth and Positive Brand Mix, While Trend
Improvements Continue for Premium Lights
May 3, 2011 (London and Denver) - SABMiller plc (SAB.L) and Molson Coors
Brewing Company (NYSE: TAP; TSX) reported that MillerCoors first quarter
underlying net income, excluding special items, increased 8.7 percent to $236
million versus the first quarter 2010, driven by positive pricing growth,
continued synergies and cost savings, and favorable brand mix.
"Our continued success in building brand equity, driving positive mix, as
well as strong cost management contributed to a good start out of the blocks
in 2011," said Leo Kiely, chief executive officer, MillerCoors. "We said
topline growth would be our priority, and we believe our strategic focus
within premium lights on innovation, organic revenue growth and marketing
execution are delivering wins in the marketplace."
Key operating results for the first quarter are compared to the prior year
comparable quarter and include MillerCoors operations in the U.S. and Puerto
Rico.
FIRST QUARTER HIGHLIGHTS
(Unless otherwise indicated, all amounts are in U.S. dollars and calculated
in accordance with U.S. GAAP, and all percentages are versus the prior-year
comparable period.)
- Underlying net income increased 8.7% to $236 million
- Total net sales of $1.699 billion were in line with first quarter 2010
- First quarter domestic net revenue per barrel, excluding contract
brewing and company-owned distributor sales, increased 2.1%
- First quarter total cost of goods sold (COGS) per barrel increased 1.2%
- Marketing, general and administrative costs decreased 1.3% due to the
one-time receipt of $14 million from a third party
For the quarter, MillerCoors domestic sales-to-retailers (STRs) were down 1.4
percent due to continued industry headwinds. This represents an improved
volume trend versus the previous five quarters. Domestic sales-to-
wholesalers (STWs) were down 2.5 percent.
First Quarter Brand STR Highlights
Premium Light STRs were level, as Coors Light was up low-single digits, while
Miller Lite improved, but was still down slightly. MGD 64 volumes were down
by double digits.
MillerCoors Craft and Import portfolio, managed by Tenth and Blake Beer
Company, grew 14 percent, driven by double-digit increases in Blue Moon and
Leinenkugel`s brands. In imports, Peroni Nastro Azzurro was up high-single
digits, ahead of the import category.
The Below Premium portfolio was down low-single digits in the quarter as a
result of MillerCoors "mind the gap" strategy, which is delivering a reduced
gap between premium and below premium segment pricing, resulting in continued
uptrading in the MillerCoors portfolio.
The Premium Regular portfolio was down mid-single digits driven by Miller
Genuine Draft, partially offset by a mid-single-digit increase in Coors
Banquet.
First Quarter Financial Highlights
MillerCoors total net sales of $1.699 billion were in line with the first
quarter 2010.
Domestic net revenue per barrel grew 2.1 percent driven primarily by
frontline pricing and brand mix, partially offset by increased costs
associated with planned cross-merchandising programs.
Total company net revenue per barrel, including contract brewing and company-
owned distributor sales, increased in the first quarter by 2.6 percent. Third-
party contract brewing volumes were down 4.0 percent for the quarter.
First quarter COGS per barrel increased 1.2 percent versus the prior year
quarter, almost entirely due to increases in freight and fuel costs, which
were partially offset by synergies and cost savings.
Marketing, general and administrative costs decreased 1.3 percent due to the
one-time receipt of $14 million from a third party.
Depreciation and amortization expenses in the first quarter were $71.5
million and additions to tangible and intangible assets totaled $89.2
million.
Special items for the quarter were $1.4 million related to relocation costs
associated with the joint venture integration.
Integration, Synergies and Cost Savings
In the first quarter, synergy savings of $23 million were delivered, driven
by plant initiatives, lower inbound and outbound freight costs, and
reductions in packaging and brewing materials.
To date, MillerCoors annualized synergies total $528 million, surpassing the
original commitment to deliver $500 million by June 30, 2011.
In addition to synergies, an additional $6 million of cost savings were
realized in the quarter related to various cost savings initiatives within
the integrated supply chain. Cumulative cost savings to date total $166
million.
MillerCoors has delivered $684 million in total annualized synergies and
other cost savings since July 1, 2008, and is on track to deliver its target
of $750 million of total synergies and cost savings by the end of 2012.
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, imports Peroni Nastro Azzurro, Pilsner Urquell, Grolsch 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.
Dollars in Millions MillerCoors LLC
Three Months Ended
March March
31, 2011 31,
2010
US GAAP: Net Income attributable to MillerCoors $234.7 $208.6
Plus: Special (Exceptional) items1 1.4 8.6
Non - GAAP Underlying Net Income 236.1 217.2
Plus: Adjustments to IFRS Underlying EBITA2 32.2 28.5
IFRS: MillerCoors underlying earnings before $268.3 $245.7
interest, taxes and amortization before exceptional
items (EBITA3)
Percent change vs. prior year MillerCoors underlying 9.2%
EBITA3
1 Special, or Exceptional items include one-time 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, share based compensation
and severance expenses between US - GAAP and IFRS. Amortization of intangible
assets, Interests, 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.
MILLERCOORS LLC
RESULTS OF OPERATIONS
(VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS)
(UNAUDITED)
US GAAP
Three Months Ended
March 31, March 31,
2011 2010
Volume in Barrels 14,829 15,228
Sales $1,975.3 $1,983.8
Excise Taxes (276.2) (282.9)
Net Sales 1,699.1 1,700.9
Cost of Goods Sold (1,063.0) (1,078.6)
Gross Profit 636.1 622.3
Marketing, General and Administrative (396.0) (401.2)
Expenses
Special Items, net (1.4) (8.6)
Operating Income 238.7 212.5
Other (Expense) Income, net (0.4) 2.3
Income Before Income Taxes and 238.3 214.8
Noncontrolling Interests
Income Taxes (1.5) (1.4)
Net Income 236.8 213.4
Net Income Attributable to Noncontrolling (2.1) (4.8)
Interest
Net Income Attributable to MillerCoors LLC $234.7 $208.6
Date: 03/05/2011 13:00:05 Produced by the JSE SENS Department.
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