US: Coors Q2 profit falls
Adolph Coors C. has announced a fall in profit for the second quarter of 2004. The company today posted higher consolidated net sales and operating income compared to the second quarter of 2003. For the 13-week quarter to 27 June, consolidated second quarter 2004 net income was US$72.0 m, down 5.6% from second quarter 2003, and earnings per share were US$1.90, down 9.1% from the prior year.
The company achieved consolidated net sales of US$1.15 bln, a 4.6% increase from second quarter 2003. Second quarter 2004 sales volume totalled 8.82 m US barrels, or 10.35 m hectolitres, a 3.4% decrease from 2003. Second quarter operating income was US$125.6 m, up 6.9% from the same period a year ago.
In a statement, Leo Kiely, CBC president and chief executive officer, said: "Overall, second quarter results for Coors Brewing Company showed improving trends in several key areas of the business, but a few, largely temporary, factors negatively impacted our overall results. Improved pricing in our major markets, solid margin and profit growth in the UK, continued strong performance of our Coors Light business in Canada, and favourable foreign exchange rates drove higher operating income in the quarter.
"These positive factors were partially offset by the negative impacts of US distributor inventory dynamics and higher logistics-related costs in our Americas business. In the Americas, while our sales to retail declined slightly, our sales to wholesalers declined 5.2% due to a significant year-over-year shift in distributor inventory patterns. In addition, our consolidated earnings per share were negatively impacted by a higher tax rate this year versus a one-time reduction in our effective tax rate last year, as well as higher diluted shares outstanding this year.
"While US retail volume declined slightly, the challenges were focused in select markets - particularly in Pennsylvania and Texas - where we face unique local issues. Sales to retail grew during the quarter in five of our largest seven states, including California and New Jersey, where trends rebounded from declines early in the year. In addition, we're pleased with the performance of recent US product introductions, including our Aspen Edge low-carbohydrate lager. Now that Aspen Edge and its advertising support have been rolled out nationally, this great-tasting beer has been gaining volume. Additionally, our high-margin Zima XXX brand has returned to double-digit percentage sales-to-retail growth since the introduction of new flavorus earlier in the year.
"In our Europe segment, volume growth in the second quarter was challenged by the lapping of heavy off-trade price discounting last year, along with a retailer inventory load-in during the first quarter this year ahead of a UK excise tax increase. Nevertheless, we grew volume during the quarter, lead by high-single-digit growth by Carling, the number-one selling UK beer brand. We were also pleased with strong margin growth in both the on- and off-trade channels in the UK."
Earlier today, Coors confirmed that it is to merge with Molson in a deal worth US$6 bln.
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