just On Call: Cost savings "critical" to Molson Coors - CFO
- Brewer says cost savings will be key
- Beer market improvement to be gradual
- Signs Labatt USA deal
Molson Coors plans to cut more costs
Molson Coors' CFO, Stewart Glendinning, has said that cost savings will remain critical to the brewer's performance as beer sales continue to struggle in its major markets.
Lower costs were a "critical driver" of Molson Coors' improved performance in the first half of 2010, said Glendinning. They will remain key for the brewer in the forseeable future, he told analysts at the Barclays Back-To-School Conference in Boston today (8 September).
Molson Coors is seeking to take more costs out of its business to compensate for depressed beer markets in the UK, US and its native Canada.
Group CEO Peter Swinburn told analysts that beer sales have shown some improvement in recent months. He spoke of "encouraging signs that the [US] premium light segment is coming back", but added that recovery is likely to be "slow and gradual". He described the UK beer sector as "a slog".
Molson Coors is half-way through a global cost savings programme that aims to achieve annual savings of US$150m by the end of 2012. Glendinning said that the brewer could overshoot this to reach $200m in savings. It achieved $31m in the first half of 2010.
Separately, Molson Coors and SABMiller are seeking to reap a collective $500m in synergies from their MillerCoors joint venture in the US by the end of June 2011. Molson has a 42% stake in the business and savings achieved so far significantly boosted MillerCoors' performance in the first half of 2010.
"More than half of MillerCoors cost savings have dropped to the bottom line," Glendinning said. Alongside cost savings, MillerCoors is seeking to tap the success of craft beers on the US market by establishing its own dedicated craft and imports division.
Molson Coors said today that it expects to receive a boost from a deal with to brew Labatt beer for the US market.
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