US: Coors earnings dive
The US brewer Adolph Coors saw its first quarter sale rise but missed analysts expectations as earnings fell drastically to US$806,000, compared to US$27.2m a year ago.
The company blamed higher pension and interest expenses, a seasonal loss for the first five weeks of the year in the Coors Brewers business and lower profits from fewer shipments from the brewer to wholesalers.
Sales rose to US$828.1m from US$745.8m, from the period a year ago.
Peter H. Coors, company chairman, said: "Although consumer demand for our brands was encouraging on both sides of the Atlantic during the first quarter of 2003, our financial results for the quarter reflect challenges in several key areas of our business. Our main challenges were widely anticipated, including higher interest and pension expense, a seasonal loss for the first five weeks of the year in our UK business, and reduced profits related to lower Americas shipments to wholesalers in the first quarter. However, because of a major snowstorm in Colorado late in the quarter, the impact of lower shipments was significantly greater than anticipated. For our UK business, negative customer, channel and brand mix shifts impacted first quarter results more than expected. It is likely many of these challenges will abate as the year progresses. Nevertheless, our entire organization is focused on improving our profit performance."
W. Leo Kiely III, president and chief executive officer, said: "The first quarter of this year was even tougher than we thought it would be. However, despite a challenging start to the year, we believe that the first quarter is not indicative of our potential for this year."
In the group's Americas segment, net sales decreased 3.3% compared to the first quarter 2002. First quarter 2003 sales volume totalled 4,905,000 US barrels, or 5,756,000 hectolitres, a 4.4% decrease from 2002. Americas distributor sales to retail increased about 0.8%, while US domestic sales to retail increased approximately 1.4%, versus the first quarter of 2002. Pretax income in the segment declined 37.8% to US$26.7m.
In Europe, net sales increased 50.1% in the first quarter of 2003 because of the timing of the CBL acquisition in 2002 and favourable currency exchange rates compared to the first quarter of last year. First quarter 2003 sales volume of owned and licensed beverage brands totalled 2,013,000 US barrels (2,362,000 hl), up about 4% from pro forma volume a year ago. Europe segment pre-tax income of US$0.7m was down from reported pre-tax income of US$13.1m a year ago.
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