CANADA: Molson Coors Q1 profits jump

By | 5 May 2009

Molson Coors has seen net profits more than double in the first quarter of 2009, due to higher beer prices and cost savings initiatives.

Net profits for the first three months of 2009 rose to US$76m, compared to $34m for the same period a year earlier, Canada-based Molson said today (5 May). Operating profits rose by 50% to $117m.

Net sales for the period slid to $824m, down from $1.8bn in the first three months of 2008. The brewer, which also reported a 2.7% dip in beer sales by volume, said that the fall was largely because its US sales are now attributed to MillerCoors, the joint venture it established with SABMiller in the US last year.

Molson said that strong brands, cost savings and higher beer prices helped it to increase earnings.

President and CEO Peter Swinburn said: "These positive factors more than offset continuing commodity inflation, unfavorable currency movements, a higher tax rate, and lower volume, particularly in the UK."

A weak sterling reduced pre-tax income in the UK by US$2m for the three-month period, while beer volume sales fell by nearly 14%, against a market down 8%, Molson said. Despite difficult conditions, the brewer said that the first quarter of 2009 was its most profitable for five years in the country.

The performance was "driven by strong pricing growth, the ramp-up of its contract brewing arrangement, and reduced marketing and pension costs, partly offset by lower volumes and higher input cost inflation", it said.

In Canada, Molson sales volumes were remained level with the first quarter of 2008, although sales to retailers fell by 3.2%.

For MillerCoors in the US, net sales rose by 3.8% to $1.7bn, compared to the combined US sales of both Molson and SABMiller in the first quarter of 2008.

During the quarter, Molson said it achieved an incremental $18m of cost savings as part of its three-year, $250m Resources for Growth (RFG) cost savings programme.

Going forward, Swinburn said: "We are pleased with the bottom-line momentum we have achieved leading into the peak summer selling season, but we nonetheless remain cautious about the rest of the year due to uncertainty around currency exchange rates and beer market volume trends, plus continuing commodity price inflation."

Sectors: Beer & cider

Companies: Molson Coors, SABMiller

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