US: Molson Coors Q2 sees charges batter profits
Molson Coors has today (2 August) posted a sharp dip in Q2 earnings. The recently-merged brewer saw sales and volumes rise, but profits hit by hefty charges.
For the 13-week period to 26 June, the company reported net sales of US$1.6bn and sales volume of 15,019,100 hectolitres, a rise from US$1.15bn in the corresponding period last year. Lower net income of US$38.5m, or US$0.45 per share, was primarily attributable to special charges totalling US$87.7m in the period. In the same quarter of 2004, net income was US$72m or US$1.90 per share.
The company also said that it plans to file an amended first quarter 2005 Form 10-Q later this week to correct the initial recording of a US deferred tax asset as part of the purchase accounting for its UK acquisition in 2002. Due to the change, the company will restate its first quarter 2005 tax provision and earnings.
In a statement, Leo Kiely, Molson Coors president and chief executive officer, said: "Overall, our second quarter results were mixed, with some trend improvements in our two largest markets - Canada and the US - and continuing challenges in both our Europe and Brazil segments. In Canada, our year-over-year sales to retail increased 2.1% during the second quarter, which was our best retail sales performance in the last seven quarters in Canada, with Coors Light growing more than 10% from a year ago. In the US, Coors Light sales to retail were up slightly compared to a year ago. In addition, the US pricing environment was still favourable, despite competitive discounting activity in some key markets on select brands and packages.
"We also faced some headwinds during the second quarter, especially in our Europe segment, which was significantly challenged by a weak UK beer industry, increased competitive discounting and margin pressure from unfavourable brand and channel mix changes. In Brazil, cost and pricing trends have improved, but continued sales declines and operating losses challenged this business.
"For the remainder of the year, we will focus on making even more progress improving our sales trends in Canada and the US. In the UK, we are working to restore volume momentum with targeted sales efforts in both the on-premise and off-premise channels while maintaining the strength of our UK brand equities. We're also accelerating a number of UK cost reduction initiatives. Across the enterprise, we will continue our work integrating the operations and organization of the combined Molson and Coors business as we build a more competitive and profitable global beer company."
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