LONDON & DENVER--(BUSINESS WIRE)--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 website, 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.
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 $U.S.) | Mar 31, 2012 | Mar 31, 2011 | |||||
|
U.S. - GAAP: Net Income Attributable to MillerCoors |
$ | 275.3 | $ | 234.7 | |||
| Plus: Special (Exceptional) Items¹ | -- | 1.4 | |||||
| Tax effect of the adjustments to arrive at underlying net income2 | -- | -- | |||||
|
Non - GAAP Underlying Net Income |
$ | 275.3 | $ | 236.1 | |||
| Plus: Adjustments to IFRS Underlying EBITA3 | 37.9 | 32.2 | |||||
|
IFRS: MillerCoors underlying earnings before interest, taxes and amortization before exceptional items (EBITA4) |
$ | 313.2 | $ | 268.3 | |||
| Percent change vs. prior year MillerCoors underlying EBITA4 | 16.7 | % | |||||
|
1Prior 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 |
||||||||
| U.S. GAAP | ||||||||
| Three Months Ended | ||||||||
| Mar 31, 2012 | Mar 31, 2011 | |||||||
| Volume in Barrels | 14,792 | 14,829 | ||||||
| Sales | $ | 2,034.6 | $ | 1,975.3 | ||||
| Excise Taxes | (274.8 | ) | (276.2 | ) | ||||
| Net Sales | 1,759.8 | 1,699.1 | ||||||
| Cost of Goods Sold | (1,070.0 | ) | (1,063.0 | ) | ||||
|
Gross Profit |
689.8 | 636.1 | ||||||
|
Marketing, General and Administrative Expenses |
(410.8 | ) | (396.0 | ) | ||||
| Special Items, net | -- | (1.4 | ) | |||||
| Operating Income | 279.0 | 238.7 | ||||||
|
Other Income (Expense), net |
1.3 | (0.4 | ) | |||||
|
Income Before Income Taxes and Non-controlling Interests |
280.3 | 238.3 | ||||||
| Income Taxes | (0.7 | ) | (1.5 | ) | ||||
| Net Income | 279.6 | 236.8 | ||||||
|
Net Income Attributable to Non-controlling Interests |
(4.3 | ) | (2.1 | ) | ||||
|
Net Income Attributable to MillerCoors LLC |
$ | 275.3 | $ | 234.7 | ||||