Insight - Molson Coors confident on UK prospects
Molson Coors has hailed strong profits growth in the UK in 2009 and said that its business in the country has good prospects, despite a tough beer market.
Net profits for Molson Coors UK more than doubled to US$32.6m in the six months to 30 June, compared to the same period last year.
Alongside the US, where Molson benefited from its new MillerCoors joint venture, the UK was a main earnings growth driver in the second quarter and first half periods, Molson Coors CEO Peter Swinburn said in the group's results conference call today (03 August).
"Our UK business is on a much firmer footing," said Swinburn.
He attributed a lift in the brewer's UK fortunes to securing a contract to sell Magners cider on draught, renegotiating contract brewing arrangements and "foregoing lower margin volumes", as well as higher pricing.
Despite the gains, Swinburn said: "We recognise that further improvements will need to be made." He added: "We recognise in the UK that we've got to address the off-trade, but we've got a solid base from which to do that."
UK net sales fell to $529m for the six months, compared to $677.6m in the same period last year, although Molson said that sales rose by 20% in the second quarter in local currency.
The group's beer sales by volume fell 13% in the UK for the half-year, compared to market-wide declines of 8% and 5% in the first and second quarters.
Mark Hunter, Molson Coors UK CEO, said that the market "remains very challenging". He indicated that Molson would retain its commitment to price increases.
The group is expecting a tougher second half-year in the UK, as it cycles some of the strategic changes made in the second half of 2008. Sales volumes may be boosted by the brewer's acquisition of Cobra Beer and the rights to Singha Beer, giving it a greater presence in Indian and Thai restaurants.
The firm also owns Carling and brews Grolsch under contract in the UK.
Molson Coors today reported second quarter earnings more than twice higher than in the same period a year earlier.
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