| Tue 2 Aug 2011, 13:00 | | SAB - SAB Miller - MillerCoors increases second quarter profits |
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SAB
SOSAB
SAB - SAB Miller - MillerCoors increases second quarter profits
SAB Miller
JSE ALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
MILLERCOORS INCREASES SECOND QUARTER PROFITS
Pricing Growth, Positive Brand Mix, Strong Cost Management Offset Major
Headwinds
August 2, 2011 (London and Denver) -SABMiller plc (SAB.L) and Molson
Coors Brewing Company (NYSE: TAP; TSX) reported that MillerCoors second
quarter underlying net income, excluding special items, increased 2.6
percent to $400 million versus the second quarter 2010, driven by
positive pricing growth, favorable brand mix, and strong cost management
amid a challenging industry environment.
"We delivered profit growth in the second quarter despite a weakening
economy combined with an array of headwinds, including record rainfall in
key markets and high fuel prices, all of which dampened consumer spending
on beer," said Chief Executive Officer Tom Long. "But we are not
satisfied with profit growth alone and we remain committed to investing
behind our brands to drive volume and share growth over time."
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
(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 2.6 percent to $400 million
*Total net sales were in line with the prior year second quarter at
$2.132 billion
*Domestic net revenue per barrel, excluding contract brewing and
company-owned distributor sales, increased 2.9 percent
*Total cost of goods sold (COGS) per barrel increased 2.3 percent,
driven by increases in freight and fuel and commodity costs
For the quarter, MillerCoors domestic sales-to-retailers (STRs) were down
2.7 percent as a result of a continued weak economic environment combined
with record rainfall in key markets and high gas prices throughout the
U.S. Domestic sales-to-wholesalers (STWs) were down 3.1 percent.
Second Quarter Brand STR Highlights
Premium Light STRs were down low-single digits, as Coors Light grew
slightly, Miller Lite declined mid-single digits and MGD 64 declined by
double digits. The Coors Light Super Cold packaging launched in May
helped drive volume on the brand in the quarter.
Tenth and Blake Beer Company grew the MillerCoors Craft and Import
portfolio double digits, driven by double-digit increases in Blue Moon
and Leinenkugel`s. The company continues to experience success with its
growing line-up of innovative seasonal craft brand extensions, including
Leinenkugel`s Summer Shandy and Blue Moon Summer Honey Wheat. Peroni
Nastro Azzurro also delivered good growth.
The Below Premium portfolio declined mid-single digits, as reduced price
gaps between Premium and Below Premium beers drove continued trading up
in the MillerCoors portfolio.
The Premium Regular portfolio was down high-single digits, with a double-
digit decline by Miller Genuine Draft, partially offset by a low-single-
digit increase by Coors Banquet.
Second Quarter Financial Highlights
MillerCoors total net sales were in line with the prior year second
quarter at $2.132 billion.
Domestic net producer revenue per barrel grew 2.9 percent, due to
frontline pricing and favorable brand mix. This growth was an
acceleration over first quarter 2011 primarily driven by improved mix.
Total company net producer revenue per barrel, including contract brewing
and company-owned distributor sales, increased by 3.5 percent. Third-
party contract brewing volumes were down 7.0 percent for the quarter.
Total COGS per barrel increased 2.3 percent driven by increases in
freight and fuel and commodity costs, partially offset by synergies and
cost savings.
Marketing, general and administrative costs increased 0.4 percent, driven
primarily by higher information system spending, which was offset in part
by continued cost savings.
Depreciation and amortization expenses for MillerCoors in the second
quarter were $72.6 million and additions to tangible and intangible
assets totaled $62.5 million.
Special items for the quarter were $1.1 million primarily related to
relocation costs associated with the joint venture integration.
Synergies and Cost Savings
In the second quarter, synergy savings of $18 million were delivered,
which comprised savings in procurement, corporate services and brewing
materials.
To date, MillerCoors cumulative synergies total $546 million, surpassing
the original commitment of $500 million to be achieved by June 30, 2011.
In addition to synergies, $9 million of other cost savings were realized,
driven by a variety of initiatives within the integrated supply chain.
Cumulative cost savings realized to date total $165 million.
MillerCoors has delivered $711 million in total annualized synergies and
cost savings since July 1, 2008, and is ahead of plan to deliver its
target of $750 million of total synergies and other 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. Tenth and Blake Beer Company, MillerCoors
new craft and import company, imports Peroni Nastro Azzurro, Pilsner
Urquell and 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 includes global brands 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
is also one of the world`s largest bottlers of Coca-Cola products.
In the year ended 31 March 2011, the group reported US$4,491 million
adjusted pre-tax profit and group revenue of US$28,311 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, 2011, 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:+447799894265
Gary Leibowitz Investor Relations, SABMiller Mob:+447717428540
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.
Three Months Ended Six Months Ended
(In million of $US) June June June June
30, 30, 30, 30,
2011 2010 2011 2010
US GAAP: Net Income $398.7 $391.2 $633.4 $599.8
Attributable to MillerCoors
Plus: Special (Exceptional) 1.1 (1.5) 2.5 7.1
Items (1)
Non-GAAP Underlying Net $399.8 $389.7 $635.9 $606.9
Income
Plus: Adjustments to IFRS 39.3 27.5 71.5 56.0
Underlying EBITA(2)
IFRS: MillerCoors $439.1 $417.2 $707.4 $662.9
underlying earnings before
interest, taxes, and
amortization before
exceptional items (EBITA3)
Percent change vs. prior 5.2% 6.7%
year MillerCoors underlying
EBITA (3)
(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, 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.
(3)EBITA - Earnings Before Interest, Taxes, and Amortization, excluding
exceptional items.
MILLERCOORS LLC
RESULTS OF OPERATIONS
(VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS $US)
(UNAUDITED)
US GAAP
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2011 2010 2011 2010
Volume in Barrels
18,325 18,982 33,154 34,210
Sales
$2,473.1 $2,485.8 $4,448.4 $4,469.6
Excise Taxes
(340.8) (351.7) (617.0) (634.6)
Net Sales
2,132.3 2,134.1 3,831.4 3,835.0
Cost of Goods Sold
(1,268.8) (1,284.8) (2,331.8) (2,363.4)
Gross Profit
863.5 849.3 1,499.6 1,471.6
Marketing, General and
Administrative (456.0) (454.0) (852.0) (855.2)
Expenses
Special Items (net)
(1.1) 1.5 (2.5) (7.1)
Operating Income
406.4 396.8 645.1 609.3
Other Income
(Expense), net (1.5) 1.0 (1.9) 3.3
Income Before
Income Taxes and Non- 404.9 397.8 643.2 612.6
controlling Interests
Income Taxes
(2.9) (2.4) (4.4) (3.8)
Net Income
402.0 395.4 638.8 608.8
Net Income
Attributable to Non- (3.3) (4.2) (5.4) (9.0)
controlling Interests
Net Income
Attributable to $398.7 $391.2 $633.4 $599.8
MillerCoors LLC
Date: 02/08/2011 13:00:01 Produced by the JSE SENS Department.
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