RNS Number : 9332B
SABMiller PLC
04 November 2009
 







SABMILLER AND MOLSON COORS REPORT DOUBLE-DIGIT QUARTERLY EARNINGS GROWTH FOR MILLERCOORS

Brewer Delivers Strong Underlying Profit Growth Despite Challenging Economic and Industry Conditions



November 4, 2009 (London and Denver) - Driven by strong revenue growth, cost management and continued synergy delivery, SABMiller plc (SAB.L) and Molson Coors Brewing Company (NYSE: TAP; TSX) today reported double-digit profit growth for MillerCoors for the quarter ended September 30, 2009. 

 

"We are delivering our synergies, controlling costs and managing revenue for sustainable profit growth," said MillerCoors CEO Leo Kiely. "In this challenging economic environment, we're also realizing the benefit of a well balanced portfolio that offers consumers choice and variety in all segments."


Key operating results for the third quarter are compared to the prior year quarter and include MillerCoors operations in the U.S. and Puerto Rico


THIRD QUARTER HIGHLIGHTS

(All amounts are in U.S. dollars and calculated in accordance with U.S. GAAP, unless otherwise indicated.) 

 


MillerCoors domestic sales-to-retailers (STRs) were down 1.3 percent due to a slight decline in premium light volumes and continued softness in above premium and premium brands. Domestic sales-to-wholesalers (STWs) fell 0.7 percentprimarily driven by lower retail sales.


Pricing remained strong in the third quarter, as domestic net revenue per barrel, excluding contract brewing and company-owned distributor sales, increased 3.7 percent driven by sustained price increases taken in the fall of 2008 and reductions in discount activity. 


Premium light brand volumes (Miller Lite, Coors Light, MGD 64) were down low-single digits largely due to a decline in Miller Lite, which was partially offset by MGD 64 growth. Miller Lite STRs were down mid-single digits and Coors Light STRs were down slightly.  


MGD 64 continued to perform well ahead of expectations, achieving STRs of nearly three quarters of a million barrels year to date.


In a challenging market, MillerCoors craft and import portfolio grew slightly during the quarter, led by high-single-digit growth of Blue Moon and low-single-digit growth of Peroni Nastro Azzurro. The domestic above-premium portfolio - which includes Miller Chill, Sparks and Killian's Irish Red - experienced a double-digit decline.  


The below premium portfolio was up low-single digits, largely due to the strong performance of Keystone Light and continued growth of Miller High Life, which more than offset declines in Milwaukee's Best. The premium regular portfolio - which includes MGD and Coors Banquet - was down double digits.


MillerCoors total net revenue increased 3.1 percent to $2.01 billion versus the prior year comparable quarter, driven by domestic net pricing. Excluding contract brewing and company-owned distributor sales, domestic net revenue increased 3.0 percent to $1.87 billion. Third-party contract brewing volumes declined 4.6 percent, though profits were up slightly from the prior-year comparable quarter.  


Cost of goods sold per barrel increased 3.5 percent as benefits from MillerCoors cost leadership programs were more than offset by brewing and packaging materials cost increases under procurement contracts largely arranged prior to more recent commodity market price reductions.


Marketing, general and administrative costs decreased 4.5 percent, driven primarily by lower organizational costs and synergies, which were partially offset by IT integration-related expenses.


For the quarter, underlying net income attributable to MillerCoors (excluding special items) increased 28.1 percent to $244.4 million versus the prior-year comparable quarter.  


Depreciation and amortization expenses for MillerCoors in the third quarter were $72.9 million and additions to tangible and intangible assets totaled $79.5 million. 


During the third quarter of 2009, MillerCoors reported special charges totaling $14.7 million, which include pension curtailment and integration expenses. 



INTEGRATION AND COST SYNERGIES

MillerCoors achieved $73 million in synergies in the third quarter largely due to marketing synergies, as well as organizational savings resulting from the elimination of duplicate and transitional positions in the third quarter 2008. Network optimization savings continue to be realized from shifting production of Coors and Miller brands into the larger MillerCoors brewery network, a process which will continue for the next nine months.  MillerCoors continues to integrate business processes and systems across the enterprise to deliver enhanced customer solutions and better leverage the scale of the business.


MillerCoors has delivered $183 million in synergies this year, bringing the total to $211 million since beginning operations on July 1, 2008.  The company now expects to achieve $270 million of cumulative synergies by the end of calendar year 2009, surpassing its original commitment of $225 million.  As previously communicatedMillerCoors will deliver incremental cost savings above its $500 million synergy target and approximately $200 million in cost savings are expected to be delivered by the end of 2012, approximately in line with current market expectations. These cost savings include efficiencies in production costs, procurement, and marketing, general and administrative expense.    


Overview of MillerCoors 

MillerCoors produces, markets and sells the MillerCoors portfolio of brands in the U.S. and Puerto Rico. Built on a foundation of great beer brands and more than 288 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 imports Peroni Nastro Azzurro, Pilsner Urquell, Grolsch and Molson Canadian and offers innovative products such as Miller Chill and Sparks.  MillerCoors 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 FallsWI 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 Grolsch, Miller Genuine Draft, Peroni Nastro Azzurro and Pilsner Urquell, as well as market-leading local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie.  SABMiller plc is also one of the largest bottlers of Coca-Cola products in the world. In the year ended March 31, 2009, the group reported $3,405 million adjusted pre-tax profit and group revenue of $25,302 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, http://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, 2009, 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.  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. Prior year results for the first six months are presented on a pro forma basis. Adjustments have been made to reflect comparative data including amortization of definite life intangible assets 












MillerCoors Reconciliation of US GAAP Net Income to Underlying Net Income (non-GAAP measure) and to EBITA, calculated under IFRS, noting that first half 2008 numbers are Pro Forma.












MillerCoors



Three Months Ended


Nine Months Ended







(In millions of $US)


Sept 30, 2009

Sept 30, 2008

Sept 30, 2009

Sept 30, 2008

US -GAAP: Net Income


229.7


168.2


740.6


479.4

Plus: Special items¹


14.7


22.6


45.5


138.7

Non - GAAP Underlying Net Income


244.4


190.8


786.1


618.1

Plus: Adjustments to arrive at IFRS Underlying EBITA²


45.2


21.8


106.5


73.4

IFRS: MillerCoors underlying earnings before interest, taxes and amortization before exceptional items (EBITA³ )

289.6


212.6


892.6


691.5

Percent change vs. prior year MillerCoors pro-forma underlying EBITA³ 

36.2%




29.1%



¹Current year special items include integration charges related to the MillerCoors Joint Venture, and charges for pension curtailment. Prior year special items include integration charges, asset impairment charges, and a loss on sale of a company owned distributorship.  

²US - 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 Minority interest have been removed to arrive at underlying EBITA.

³EBITA - Earnings Before Interest, Taxes, and Amortization, excluding exceptional items.


These financial results are not necessarily indicative of the results for Molson Coors Brewing Company or SABMiller plc for the comparable periods. 


This announcement is for information only and does not constitute an offer or an invitation to acquire or dispose of any securities or investment advice or an inducement to enter into investment activity. This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire the securities of SABMiller or Molson Coors (the "Companies") in any jurisdiction.


The distribution of this announcement may be restricted by law. Persons into whose possession this announcement comes are required by the Companies to inform themselves about and to observe any such restrictions.


MILLERCOORS LLC

RESULTS OF OPERATIONS

(VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS)

(UNAUDITED)










Three Months Ended


Nine Months Ended


Sept 30, 2009


Sept 30, 2008


Sept 30, 2009


Sept 30, 2008


Actual


Actual


Actual


Pro Forma 


Volume in barrels

  18,441 


  18,646


  53,687 


  54,539 










Sales


2,350.7


  2,293.4 


  6,855.8 


  6,710.2 


Excise Taxes


(341.2)


   

(343.7)


   

 (993.7)


  (1,004.1)

   

Net Sales


2,009.5


  1,949.7 


  5,862.1 


  5,706.1 


Cost of Goods Sold


(1,266.6)


  (1,236.9)


  (3,618.8)


  (3,513.7)

   

Gross profit


742.9


  712.8 


  2,243.3 


  2,192.4 

Marketing, General and Administrative Expenses


(496.0)


  (519.1)


  (1,438.4)


  (1,566.2)


Special Items (net)


(14.7)


  (22.6)


  (45.5)


  (138.7)

  

 Operating Income


232.2


  171.1 


  759.4 


  487.5 


Other Income (Expense), net


2.3


   

 2.3 


   

 1.6


   

7.1 









Income before Income Taxes and Minority Interests


234.5


  173.4 


  761.0 


  494.6 


Income Tax Expense


(2.3)


   

 (1.9)  


   

 (6.9)



(1.9)  


Net Income


232.2


   

171.5 


   

 754.1 


  492.7 

Net income attributable to Non-controlling interest


(2.5)


  (3.3)


  (13.5)


  (13.3)

Net Income Attributable to MillerCoors LLC


229.7


  168.2 


  740.6 


  479.4 



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

Leah Ramsey

Investor Relations, Molson Coors

303/927-2397


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