Molson Coors has admitted it will feel the impact from the loss of the distribution deals

Molson Coors has admitted it will feel the impact from the loss of the distribution deals

Molson Coors has warned that its pre-tax profits will take a US$40m hit this financial year from the loss of three key distribution deals in the UK and Canada.

The group has given up the rights to the Modelo brands in the UK, as Anheuser-Busch InBev has taken distribution in-house following its US$20bn capture of the Mexican brewer. Molson Coors took on the brands in 2011, but the agreement expired at the end of last year.

The brewer will also see the end of a contract brewing agreement with Heineken in the country in April, which is leading to Molson Coors closing its Alton brewery in Hampshire.

In Canada meanwhile, it agreed last year to give up the rights to Miller Brewing Co's portfolio after a long-running legal battle with SABMiller.

Mark Hunter, Molson Coors' CEO, admitted to analysts during a post-results conference call that the group's 2015 results will be “negatively impacted” from losing the contracts.

“We expect the loss of these three contracts to present a pre-tax profit headwind this year totalling approximately US$40m,” he said.

However, Hunter said the impact will be lessened by the closure of the Alton brewery. The company is also taking on distribution for the Modelo brands in Central Europe. But, he warned: “Volume for these brands is currently much smaller than annualised volume of the brands that we are losing in the UK.”

Molson Coors will also be helped by taking on FEMSA's brands in Canada, Hunter added. 

On Tuesday, the US and Canada-headquartered brewer reported a 9% drop in full-year profits after a 1% slip in sales.