CANADA/US: Molson Coors nine-month profits drop
- Nine-month net profits fall by 16% to US$503.1m
- Net sales up by 6.6% to $2.6bn
- Operating profits down by 3.5% to $679m
- Weak demand and poor UK performance hits profits
Molson Coors reports tough trading
Higher costs and an unexpectedly weak performance in the UK have caused Molson Coors to report a drop in nine-month profits, despite a solid increase in net beer sales over the same period.
Tough conditions in Molson Coors' major beer markets and higher commodity costs have damaged the brewer's profits so far in 2011. For the first nine months of the year, operating profits dropped by 3.5% to US$679m. Net profits slipped by 16% to $503.1m, though the fall was made to look worse by a one-off gain in the same period of 2010.
In the third quarter of the year, to the end of September, higher costs and a drop in volume sales lowered earnings from Molson Coors' US joint-venture with SABMiller, MillerCoors, by 14% on the same period of last year. Meanwhile, Molson Coors said today (2 November) that its pre-tax profits slumped by 25% in the UK for the three-month period, reflecting a weak beer market.
There was, however, brighter news at the top-line. Molson Coors reported a 6.6% rise in nine-month net sales, to $2.6bn, primarily led by price increases. Net sales rose by 9% in the third quarter, to $954.4m.
Molson Coors' president and CEO, Peter Swinburn, said: "What’s new in the third quarter is additional MG&A expense in the US business and incremental weakness in the UK on-premise channel. While the MillerCoors MG&A increase was anticipated, we did not expect the degree of softness in the UK market."
He added: "Nonetheless, we continued to pursue all three of our growth strategies: maximizing the value of our core markets, expanding our exposure to emerging markets, and taking advantage of smart M&A opportunities."
Analyst group Stifel Nicolaus said that Molson Coors' profits were below its expectations. But, it added: "We believe 3Q’s profit weakness overstates Molson Coors’ challenges."
To view the company's announcement, click here.
Earlier this week, Harris Interactive released its annual study of brand health for beverages in the US....
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