| Tue 8 May 2012, 13:00 | | SAB - SABMiller plc - Millercoors Delivers 16.6% underlying net income growth |
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SAB
SOSAB
SAB - SABMiller plc - Millercoors Delivers 16.6% underlying net income growth
for the first quarter positive pricing, mix and weather boost results
SABMiller plc
JSEALPHA CODE: SAB
ISIN CODE: SOSAB
ISIN CODE: GB0004835483
MILLERCOORS DELIVERS 16.6% UNDERLYING NET INCOME GROWTH FOR THE FIRST QUARTER
POSITIVE PRICING, MIX AND WEATHER BOOST RESULTS
May 8, 2012 (London and Denver) - SABMiller plc (SAB.L) and Molson Coors Brewing
Company (NYSE: TAP; TSX) reported that MillerCoors first quarter underlying net
income increased 16.6 percent to $275.3 million versus the first quarter 2011,
driven by positive pricing growth, cost management and favorable mix.
"We delivered a solid first quarter in 2012," said MillerCoors Chief Executive
Officer Tom Long. "Our sales trends improved, and we saw net revenue growth that
was primarily driven by strong mix, positive pricing and unseasonably warm
weather, particularly around St. Patrick`s Day. We also laid the ground work
with the re-positioning of some of our top brands, such as Miller Lite and
Miller64 and continued to deliver strong growth from Tenth and Blake,
particularly from Leinenkugel`s Summer Shandy. We are encouraged by our trend
improvements, and we have the right strategy, programs and people in place to
continue growing our brand strength and earning customer preference."
First Quarter Highlights
Unless otherwise indicated, all amounts are in U.S. dollars and calculated in
accordance with U.S. GAAP. All percentages are versus the prior-year comparable
period and include MillerCoors operations in the U.S. and Puerto Rico. All
sales to retail results are presented on a trading-day-adjusted basis, as the
first quarter of 2012 had one additional trading day compared with the same
quarter in the prior year.
Underlying net income (a non-GAAP measure) increased 16.6 percent to $275.3
million.
Total net sales increased 3.6 percent to $1.760 billion.
Domestic net revenue per barrel, excluding contract brewing and company-owned
distributor sales, increased 3.9 percent.
Total cost of goods sold (COGS) per barrel increased 0.9 percent.
For the quarter, MillerCoors domestic sales-to-retailers (STRs) were down 1.6
percent. This performance represents meaningful improvement over the prior
three quarters and was aided by unseasonably warm weather in the month of March
across much of the country, particularly in core markets for MillerCoors such as
in the Midwest and Northeast. Domestic sales to wholesalers (STWs) decreased
0.9%, and distributor inventory levels were lower at the end of the quarter than
a year ago.
Brand Highlights for the First Quarter
Premium Light STRs were down low-single digits in the first quarter. Miller Lite
declined low single digits and launched new advertising and brand positioning
themed "It`s Miller Time" in mid-March. Although Miller64 volumes were lower
than MGD64 volumes in the prior year, new brand positioning was introduced in
early March with new advertising and packaging, which is off to a great start.
Coors Light grew low-single digits and kicked off two multicultural programs in
the quarter - activation around our sponsorship of Mexico`s First Division
Soccer League and the Ice Cold Leader program, which rewards African American
community leadership.
Tenth and Blake Beer Company continued to grow the MillerCoors Craft and Import
portfolio by double digits in the quarter driven by increases in Leinenkugel`s
and Blue Moon. Leinenkugel`s Summer Shandy was introduced a month earlier this
year and saw particularly strong growth, more than doubling volumes. Peroni
Nastro Azzurro grew high-single digits and continued to show strong growth in
the on-premise market. The integration of The Crispin Cider Company and its
affiliate Fox Barrel Cider Company is progressing well, resulting in a
significant increase in cider production since the acquisition.
The Below Premium portfolio declined low-single digits, as the company
maintained appropriate 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 partly offset by low-single-digit growth of
Coors Banquet.
Financial Highlights for the First Quarter
For the quarter, MillerCoors underlying net income increased 16.6 percent to
$275.3 million.
Domestic net producer revenue per barrel grew 3.9 percent, the highest quarterly
increase in three years, aided by management of pricing and promotions and
accelerated mix gains.
Total company net producer revenue per barrel, including contract brewing and
company-owned distributor sales, increased by 3.8 percent for the quarter.
Third-party contract brewing volumes were up by 5.7 percent driven by increases
in Miller Brewing International and other contract partners.
Total COGS per barrel increased 0.9 percent for the quarter driven by packaging
innovation, higher freight, brand premiumization and brewing material costs,
partially offset by tight cost control and savings initiatives.
Marketing, general and administrative (MG&A) costs increased 3.7 percent for the
quarter to $410.8 million, driven by cycling the one-time receipt of $14 million
from a third party in 2011 and an increase in short and long-term incentive
expenses this year. These increases were partly offset by the re-phasing of
certain marketing programs to the upcoming three quarters.
In the first quarter, $25 million of cost savings were realized, driven by
various initiatives primarily within the integrated supply chain.
Depreciation and amortization expenses for MillerCoors in the first quarter were
$71.1 million and additions to tangible and intangible assets totaled $46.4
million.
There were no special charges during the first quarter.
Overview of MillerCoors
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 the
United States, capturing nearly 30 percent of beer sales in the U.S. and Puerto
Rico. Led by two of the best-selling beers in the industry, MillerCoors has a
broad portfolio of brands across every major industry segment. The portfolio is
led by the company`s premium light brands: Coors Light, Miller Lite and
Miller64. Coors Light, the World`s Most Refreshing Beer, offers consumers
refreshment as cold as the Rockies. Miller Lite established the American light
beer category in 1975, offering beer drinkers a light beer that tastes like beer
should. Miller64 is 64 calories of crisp, light taste that complements a
balanced lifestyle. MillerCoors brews premium beers Coors Banquet and Miller
Genuine Draft, and economy brands Miller High Life and Keystone Light. Tenth
and Blake Beer Company, MillerCoors craft and import division, 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, Wisc., and
two microbreweries, the Tenth 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 through great people changing the way America
enjoys beer. MillerCoors builds its brands the right way through brewing
quality, responsible marketing and sustainable environmental and community
impact. MillerCoors is a joint venture of SABMiller plc and Molson Coors
Brewing Company. Learn more at MillerCoors.com, at facebook.com/MillerCoors or
on Twitter through @MillerCoors.
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, Tyskie and Victoria Bitter. 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 audit. 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 Ended
(In millions of Mar 31, Mar 31, 2011
$U.S.) 2012
U.S. - GAAP: Net $ $ 234.7
Income Attributable 275.3
to MillerCoors
Plus: Special 1.4
(Exceptional) Items --
Tax effect of the --
adjustments to arrive --
at underlying net
income2
Non - GAAP Underlying $ $ 236.1
Net Income 275.3
Plus: Adjustments to 37.9 32.2
IFRS Underlying
EBITA3
IFRS: MillerCoors $ $ 268.3
underlying earnings 313.2
before interest,
taxes and
amortization before
exceptional items
(EBITA4)
Percent change vs. 16.7%
prior year
MillerCoors
underlying EBITA4
Prior year, Special, or Exceptional items include one-time
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.
3U.S. 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, share-based compensation and
severance expenses between U.S. 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 $U.S.)
(Unaudited)
U.S. GAAP
Three Months Ended
Mar 31, Mar 31,
2012 2011
Volume in Barrels 14,829
14,792
Sales $ $
2,034.6 1,975.3
Excise Taxes (276.2)
(274.8)
Net Sales 1,699.1
1,759.8
Cost of Goods Sold (1,063.0)
(1,070.0)
636.1
Gross Profit 689.8
(396.0)
Marketing, General and (410.8)
Administrative
Expenses
Special Items, net -- (1.4)
Operating Income 238.7
279.0
(0.4)
Other Income 1.3
(Expense), net
238.3
Income Before Income 280.3
Taxes and Non-
controlling Interests
Income Taxes (1.5)
(0.7)
Net Income 236.8
279.6
(2.1)
Net Income (4.3)
Attributable to Non-
controlling Interests
$ $
Net Income 275.3 234.7
Attributable to
MillerCoors LLC
Date: 08/05/2012 13:00:01 Produced by the JSE SENS Department.
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