| Wed 2 Nov 2011, 13:00 | | SAB - SABMiller - MillerCoors reports challenging third quarter |
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SAB
SOSAB
SAB - SABMiller - MillerCoors reports challenging third quarter
SABMiller
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
MILLERCOORS REPORTS CHALLENGING THIRD QUARTER
Slight Improvement in Retail Trends with Tenth and Blake Leading Craft
Segment Growth
November 2, 2011 (London and Denver) - SABMiller plc (SAB.L) and Molson
Coors Brewing Company (NYSE: TAP; TSX) reported that MillerCoors third
quarter underlying net income, excluding special items, decreased 14.1
percent to $286.9 million versus the third quarter 2010, driven by a weak
economy, low consumer spending and commodity inflation.
"Despite the toughest headwinds we`ve seen as a company, we slightly improved
our sales to retailer trend this quarter versus last quarter and continued to
deliver our cost savings commitments," said MillerCoors Chief Executive
Officer Tom Long. "We remain focused on driving profitable top-line and share
growth with a strong and steady commitment to our brands."
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
(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 (a non-GAAP measure) decreased 14.1 percent
to $286.9 million
* Total net sales decreased 2.5 percent to $1.965 billion
* Domestic net revenue per barrel, excluding contract brewing and
company-owned distributor sales, increased 1.8 percent
* Total cost of goods sold (COGS) per barrel increased 3.2 percent
* Special charges for the quarter totaled $110.9 million
For the quarter, MillerCoors domestic sales-to-retailers (STRs) were down 2.0
percent, a slight improvement from the second quarter. Domestic sales-to-
wholesalers (STWs) were down 4.7 percent. The STW decline was higher than the
STR decline due to the timing of shipments year over year.
Third Quarter Brand STR Highlights
Premium Light STRs were down low-single digits, as Coors Light grew low-
single digits, Miller Lite declined mid-single digits and MGD 64 declined
double digits.
Tenth and Blake Beer Company grew the MillerCoors Craft and Import portfolio
by 17.2 percent in the quarter driven by double digit increases in Blue Moon
and Leinenkugel`s. The company continues to drive success with its innovative
seasonal craft brand extensions, such as Blue Moon Summer Honey Wheat and
Leinenkugel`s Summer Shandy. Peroni Nastro Azzurro also delivered good
growth in the mid-single digits.
The Below Premium portfolio declined mid-single digits, as the company
reduced price gaps between Premium and Below Premium beers.
The Premium Regular portfolio was down mid-single digits, with a double-digit
decline by Miller Genuine Draft, partially offset by a mid-single-digit
increase by Coors Banquet.
Third Quarter Financial Highlights
MillerCoors total net sales declined by 2.5 percent to $1.965 billion.
Domestic net producer revenue per barrel grew 1.8 percent primarily due to
front line pricing and favorable brand mix.
Total company net producer revenue per barrel, including contract brewing and
company-owned distributor sales, increased by 1.7 percent. Third-party
contract brewing volumes were up by 1.0 percent.
Total COGS per barrel increased 3.2 percent driven by higher freight, fuel
and packaging costs, an out-of-period depreciation charge of $5.2 million, as
well as lower absorption of fixed-costs, partly offset by cost savings.
Marketing, general and administrative costs increased 3.2 percent driven
primarily by higher information system spending, an out-of-period
depreciation charge of $7.3 million and higher marketing costs.
Depreciation and amortization expenses for MillerCoors in the third quarter
were $87.0 million and additions to tangible and intangible assets totaled
$62.2 million.
Special charges for the quarter were $110.9 million, which included a $60.0
million write-down in the value of the Sparks brand and a charge of $50.9
million related to the planned assumption of a multi-employer pension plan
for brewery workers.
Cost Savings
In the third quarter, $27 million of cost savings were realized driven by a
variety of initiatives primarily within the integrated supply chain.
Annualized cost savings realized since the inception of the joint venture
total $192 million. Synergies remain at $546 million as the program completed
at the end of the second quarter.
MillerCoors has delivered $738 million in total annualized synergies and cost
savings since July 1, 2008, and now expects to deliver on its target of $750
million of total synergies and other cost savings by the end of 2011, a year
earlier than originally planned.
###
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
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 positive 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: +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.
Three Months Nine Months Ended
Ended
(In millions of $US) Sept Sept Sept Sept
30, 30, 30, 30,
2011 2010 2011 2010
US -GAAP: Net Income $ $ $ $
Attributable to 176.4 313.0 809.8 912.8
MillerCoors
Plus: Special
(Exceptional) Items1 110.9 21.0 113.4 28.1
Tax effect of the
adjustments to arrive (0.4) (0.1) (0.4) (0.1)
at underlying net
income2
Non - GAAP Underlying $ $ $ $
Net Income 286.9 333.9 922.8 940.8
Plus: Adjustments to 29.1 47.8 100.6 103.8
IFRS Underlying
EBITA3
IFRS: MillerCoors $ $ $ $
underlying earnings 316.0 381.7 1,023.4 1,044.6
before interest,
taxes and
amortization before
exceptional items
(EBITA4)
Percent change vs. -17.2% -2.0%
prior year
MillerCoors
underlying EBITA4
1Current year, Special, or Exceptional, items include a write-
down in the value of the Sparks brand, a charge related to
the planned assumption of a multi-employer pension plan for
our workers and integration charges related to the
MillerCoors Joint Venture. Prior year includes pension and
post-retirement benefit curtailments and integration charges
related to the MillerCoors Joint Venture.
2The tax effect of the adjustments to arrive at underlying net
income attributable to MillerCoors, a non-GAAP measure,
is calculated based on the estimated tax rate applicable to the item(s) being
adjusted in the period in which they arose.
3US - 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.
4EBITA - 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 Nine Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
2011 2010 2011 2010
Volume in
Barrels 17,167 17,914 50,321 52,124
Sales $ $ $ $
2,285.2 2,350.2 6,733.6 6,819.8
Excise Taxes
(320.3) (334.3) (937.3) (968.9)
Net Sales
1,964.9 2,015.9 5,796.3 5,850.9
Cost of Goods
Sold (1,213.3) (1,226.7) (3,545.1) (3,590.1)
Gross Profit
751.6 789.2 2,251.2 2,260.8
Marketing,
General and (461.5) (447.4) (1,313.5) (1,302.6)
Administrative
Expenses
Special Items,
net (110.9) (21.0) (113.4) (28.1)
Operating
Income 179.2 320.8 824.3 930.1
Other Income
(Expense), net 2.4 0.2 0.5 3.5
Income Before
Income Taxes 181.6 321.0 824.8 933.6
_ and Non-
controlling
Interests
Income Taxes
(1.6) (2.1) (6.0) (5.9)
Net Income
180.0 318.9 818.8 927.7
Net Income
Attributable to (3.6) (5.9) (9.0) (14.9)
Non-controlling
Interests
Net Income $ $ $ $
Attributable to 176.4 313.0 809.8 912.8
MillerCoors LLC
Date: 02/11/2011 13:00:02 Produced by the JSE SENS Department.
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