Accelerated Synergies, Strong Revenue Growth, and Cost Management
Drive Nearly 50% Increase in Underlying Profits Despite Continuing
Commodity Cost Pressures LONDON and DENVER, May 5
/PRNewswire-FirstCall/ -- Based on accelerated synergy delivery,
strong revenue growth, disciplined cost management and timing of
marketing expenditure, SABMiller plc (SAB.L) and Molson Coors
Brewing Company (NYSE: TAP; TSX) today reported increased profits
for MillerCoors on a pro forma basis for the quarter ended March
31, 2009, despite continuing commodity cost pressures. "We
delivered growth on five of our six focus brands, and we increased
profitability through strong pricing growth and reduced price
promotions," said MillerCoors Chief Executive Officer Leo Kiely.
"These results demonstrate the strength of the MillerCoors
portfolio in the face of a challenging economy and intense
competition." BRAND HIGHLIGHTS Key operating results for the first
quarter are compared to the prior year on a pro forma basis(1) and
include MillerCoors operations in the U.S. and Puerto Rico.
MillerCoors volumes for the period are reported on a
trading-day-adjusted basis, which reflects one fewer trading day in
the quarter versus a year ago. -- Five out of six MillerCoors focus
brands increased sales-to-retailers (STRs) in the first quarter: --
Coors Light STRs were up low single digits -- Miller Lite STRs
decreased mid single digits, a reduced year-over-year rate of
decline versus the previous quarter -- The continued acceleration
of MGD 64 led to volume growth in the Miller Genuine Draft
franchise (up mid single digits) for the first time in a decade --
The craft and import portfolio rose in the first quarter, as Blue
Moon continued to perform well with STRs up high single digits --
Keystone Light delivered a strong double-digit increase in STRs --
Miller High Life growth accelerated to mid single digits (1)
MillerCoors pro forma figures are based on results for Miller and
Coors reported under either International Financial Reporting
Standards (IFRS) for the fiscal quarter ended March 2008, or U.S.
GAAP for the fiscal quarter ended March 2008. Adjustments have been
made to reflect comparative data including amortization of
definite- life intangible assets and the exclusion of significant
one-time items. MillerCoors domestic STRs increased 0.4 percent
versus the prior year pro forma quarter due to strong results from
five of the six focus brands, offset primarily by declines in
Milwaukee's Best. Domestic sales-to-wholesalers (STWs) declined 1
percent versus prior year, while total STWs declined 2 percent
driven by a double-digit reduction in contract brewing volumes.
Pricing remained strong in the first quarter as domestic net sales
per barrel, excluding contract brewing and company-owned
distributor sales, increased 5.6 percent based on 2008 price
increases (in the first and fourth quarters) and reductions in
discounting. Pricing growth was lower than the previous quarter due
to cycling of early 2008 general price increases. Premium light
brand STRs were up slightly versus prior year due to solid growth
of Coors Light and continued acceleration of MGD 64, despite price
increases across the premium light brand segment. Coors Light was
up low single digits versus prior year. Miller Lite STRs were down
mid single digits, a reduced rate of decline versus the previous
quarter. A new marketing campaign for Miller Lite launched in late
March focused on the brand's long-standing consumer equity
associated with the brand's taste. Innovative new packaging
reinforcing the brand's taste platform is rolling out nationwide
this month. MGD 64 continued to accelerate since its national
launch in fall 2008. For the quarter, MGD 64 exceeded Miller
Genuine Draft Light volumes versus the prior quarter and drove
mid-single-digit growth in the MGD franchise. Coors Banquet
continued to generate good growth. The craft and import portfolio
rose slightly in the quarter, led by the strong performance of Blue
Moon and Peroni Nastro Azzurro, offset by declines in Pilsner
Urquell and Weinhard's. The domestic above premium portfolio
declined double digits due to lower Miller Chill volume. The new
reformulated 100-calorie Miller Chill featuring new packaging and
advertising is currently rolling out nationwide. The Sparks
franchise continued to generate growth in the first quarter
following reformulation of the product. The below premium portfolio
was up low single digits compared to the prior year's first
quarter, as the strong performance of Keystone Light and
accelerated growth of Miller High Life more than offset declines in
Milwaukee's Best and Icehouse. FIRST QUARTER FINANCIAL HIGHLIGHTS
(All amounts are in U.S. dollars and calculated in accordance with
U.S. GAAP, unless otherwise indicated.) -- Underlying net income
attributable to MillerCoors, excluding special items, increased by
46.3% to US$216.4 million -- IFRS Underlying EBITA increased by
52.6% -- Total net sales increased 3.8% to $1.716 billion --
Domestic net revenue per barrel increased by 5.6% -- Cost of goods
sold (COGS) per barrel increased by 5.3% -- Marketing, general and
administrative costs decreased by 9.1%, driven in part by marketing
expenditure timing and synergy delivery MillerCoors total net sales
increased by 3.8 percent to $1.716 billion versus the prior pro
forma quarter. Excluding contract brewing and company-owned
distributor sales, net sales increased 4.5 percent to $1.609
billion. Third-party contract brewing volumes declined 10 percent,
though profits from contract brewing increased slightly. Though
MillerCoors continues to realize supply chain related synergies and
deliver savings from its cost leadership programs - Resources For
Growth and Project Unicorn - Cost of Goods Sold (COGS) per barrel
increased by 5.3 percent due to significant increases in brewing
and packaging materials related to high commodity costs this year.
For the quarter, marketing, general and administrative costs
decreased by 9.1 percent driven by timing and management of
marketing and sales spending and the accelerated timing of synergy
delivery. For the quarter, net income attributable to MillerCoors
(excluding special items) is $68.5 million ahead of the prior pro
forma quarter. Depreciation and amortization expense for
MillerCoors in the first quarter was approximately $71 million and
additions to tangible and intangible assets totaled $97 million.
INTEGRATION AND COST SYNERGIES The integration of MillerCoors
business processes and systems to enable faster local
decision-making and streamlining of costs is proceeding well. The
MillerCoors network optimization project is ahead of schedule, as
more than 60 percent of the planned brewing production relocations
were completed by April 1, 2009. Finally, construction of the new
MillerCoors Chicago corporate headquarters is nearing completion
with an expected occupancy date in the third quarter of 2009.
MillerCoors further accelerated synergy delivery timing, realizing
$50.1 million in the first quarter, which captures some savings
originally planned for delivery in the second quarter. A total of
$78.4 million in synergy savings has been realized since July 1,
2008, exceeding the company's original goal of $50 million for the
first 12 months of operations. The company now expects to realize
$128 million of synergies by June 30, 2009. By the end of calendar
year 2009, MillerCoors expects to achieve a total of $238 million
in synergies, surpassing its original forecast of $225 million.
While the timing of synergy delivery has accelerated, MillerCoors
$500 million synergy goal is unchanged. During the first quarter of
2009, MillerCoors reported special items totaling $10.4 million due
to employee relocation and retention expenses relating to the
formation of the company. As demonstrated in the first quarter,
MillerCoors will continue to execute net revenue management
strategies that drive the size and value of the beer category,
creating strong brand positions for the long term. The company
plans to execute strong marketing programs in national chains to
create profitable growth opportunities for the upcoming key summer
selling season. Finally, MillerCoors continues to pursue strong
cost management and is well on its way to deliver its stated
synergies goal of $500 million in three years. Overview of
MillerCoors MillerCoors produces, markets and sells the MillerCoors
portfolio of brands in the U.S. and Puerto Rico. Built on a
foundation of great beer brands and more than 288 years of brewing
heritage, MillerCoors continues the commitment of its founders to
brew the highest quality beers. MillerCoors is the second-largest
beer company in America, capturing nearly 30 percent of U.S. beer
sales. Led by two of the best-selling beers in the industry,
MillerCoors has a broad portfolio of highly complementary brands
across every major industry segment. Miller Lite is the
great-tasting beer that established the American light beer
category in 1975, and Coors Light is the brand that introduced
consumers to Rocky Mountain cold refreshment. MillerCoors brews
premium beers Coors Banquet and Miller Genuine Draft; and economy
brands Miller High Life and Keystone Light. The company also
imports Peroni Nastro Azzurro, Pilsner Urquell, Grolsch and Molson
Canadian and offers innovative products such as Miller Chill and
Sparks. MillerCoors features craft brews from the Jacob Leinenkugel
Brewing Company, Blue Moon Brewing Company and the Blitz-Weinhard
Brewing Company. MillerCoors operates eight major breweries in the
U.S., as well as the Leinenkugel's craft brewery in Chippewa Falls,
WI and two microbreweries, the 10th Street Brewery in Milwaukee and
the Blue Moon Brewing Company at Coors Field in Denver. MillerCoors
vision is to become the best beer company in America by driving
profitable industry growth. MillerCoors insists on building its
brands the right way through brewing quality, responsible marketing
and environmental and community impact. MillerCoors is a joint
venture of SABMiller plc and Molson Coors Brewing Company. Overview
of SABMiller SABMiller plc is one of the world's largest brewers
with brewing interests or distribution agreements across six
continents. The group's brands include premium international beers
such as Miller Genuine Draft, Peroni Nastro Azzurro, Grolsch and
Pilsner Urquell, as well as an exceptional range of market leading
local brands. Outside the USA, SABMiller plc is also one of the
largest bottlers of Coca-Cola products in the world. In the year
ended March 31, 2008, the group reported $3,639 million adjusted
pre-tax profit and revenue of $21,410 million. SABMiller plc is
listed on the London and Johannesburg stock exchanges. For more
information on SABMiller plc, visit the company's website:
http://www.sabmiller.com/. Overview of Molson Coors Molson Coors
Brewing Company is one of the world's largest brewers. It brews,
markets and sells a portfolio of leading premium quality brands
such as Coors Light, Molson Canadian, Molson Dry, Carling, Coors
Banquet and Keystone Light in North America, Europe and Asia. For
more information on Molson Coors Brewing Company, visit the
company's web site, http://www.molsoncoors.com/ MillerCoors Results
and Related Reconciliations The table below reconciles net income
attributable to MillerCoors, reported in accordance with US GAAP as
used for inclusion within Molson Coors reported results, to
MillerCoors EBITA as used for inclusion within SABMiller's reported
results. Underlying net income and EBITA are non-GAAP measures.
Management of both companies believes that underlying net income
and EBITA provide shareholders with a useful basis for assessing
the profit performance of MillerCoors. There are limitations to
using non-GAAP financial measures, including the difficulty
associated with comparing companies that use similarly named
non-GAAP measures whose calculations may differ from the company's
calculations. Prior year results are presented on a pro forma
basis. Adjustments have been made to reflect comparative data
including amortization of definite life intangible assets and the
exclusion of significant one-time items. MillerCoors Reconciliation
of US GAAP Net Income to Underlying Net Income (non-GAAP measure)
and to EBITA, calculated under IFRS (2008 results are Pro Forma)
MillerCoors 1st Quarter Ended ----------------- (In millions of
$US) March 31, March 31, 2009 2008 -------- -------- US -GAAP: Net
Income attributable to MillerCoors 206 137 --- --- Plus: Special
(Exceptional) items(1) 10 11 -- -- Non - GAAP Underlying Net Income
attributable to MillerCoors 216 148 --- --- Plus: Adjustments to
IFRS Underlying EBITA(2) 19 6 -- -- IFRS: MillerCoors underlying
earnings before interest, taxes and amortization before exceptional
items (EBITA(3)) 235 154 --- --- Percent change vs. prior year
MillerCoors pro-forma underlying EBITA(3) 52.6% (1) Special, or
Exceptional items include one-time integration charges related to
the MillerCoors Joint Venture (2) US - GAAP Underlying Net Income
attributable to MillerCoors to IFRS EBITA adjustments relate to
differing treatment of step-up depreciation, pension,
post-retirement benefits, consolidation of container joint
ventures, share based compensation, and severance expenses between
US - GAAP and IFRS. Amortizations of intangible assets, Interest,
Taxes, Equity Income, and Minority interest have been removed to
arrive at underlying EBITA. (3) EBITA - Earnings Before Interest,
Taxes, and Amortization, excluding exceptional items. These
financial results are not necessarily indicative of the results for
Molson Coors Brewing Company or SABMiller plc for the comparable
periods. This announcement is for information only and does not
constitute an offer or an invitation to acquire or dispose of any
securities or investment advice or an inducement to enter into
investment activity. This announcement does not constitute an offer
to sell or issue or the solicitation of an offer to buy or acquire
the securities of SABMiller or Molson Coors (the "Companies") in
any jurisdiction. The distribution of this announcement may be
restricted by law. Persons into whose possession this announcement
comes are required by the Companies to inform themselves about and
to observe any such restrictions. MILLERCOORS LLC RESULTS OF
OPERATIONS (VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS) (UNAUDITED)
Three Months Ended ------------------ March 31, March 31, 2009 2008
-------- --------- Actual Pro Forma -------- --------- Volume in
barrels 15,699 16,013 ======== ========= Sales 2,005.7 1,947.1
Excise Taxes (289.8) (294.7) -------- -------- Net Sales 1,715.9
1,652.4 Cost of Goods Sold (1,049.9) (1,017.0) Gross profit 666.0
635.4 Marketing, General and Administrative Expenses (441.8)
(485.9) Special Items (net) (10.4) (11.3) Operating Income 213.8
138.2 Other Income (Expense), net (0.5) 2.6 -------- --------
Income before Income Taxes and Non-controlling Interests 213.3
140.8 Income Tax Expense (2.1) - -------- -------- Net Income 211.2
140.8 Net income attributable to Non-controlling interests (5.2)
(4.2) -------- -------- Net Income attributable to MillerCoors
206.0 136.6 ======== ======== Forward-Looking Statements This press
release includes "forward-looking statements" within the meaning of
the U.S. federal securities laws, and language indicating trends,
such as "anticipated" and "expected". It also includes financial
information, of which, as of the date of this press release, the
Companies' independent auditors have not completed their review.
Although the Companies believe that the assumptions upon which
their respective financial information and their respective
forward-looking statements are based are reasonable, they can give
no assurance that these assumptions will prove to be correct.
Important factors that could cause actual results to differ
materially from the Companies' projections and expectations are
disclosed in Molson Coors' filings with the Securities and Exchange
Commission or in SABMiller's annual report and accounts for the
year ended March 31, 2008, and in other documents which are
available on SABMiller's website at http://www.sabmiller.com/.
These factors include, among others, changes in consumer
preferences and product trends; price discounting by major
competitors; failure to realize anticipated results from synergy
initiatives; and increases in costs generally. All forward-looking
statements in this press release are expressly qualified by such
cautionary statements and by reference to the underlying
assumptions. Neither SABMiller nor Molson Coors undertakes to
update forward-looking statements relating to their respective
businesses, whether as a result of new information, future events
or otherwise. Neither SABMiller nor Molson Coors accepts any
responsibility for any financial information contained in this
press release relating to the business or operations or results or
financial condition of the other or their respective groups.
DATASOURCE: Molson Coors Brewing Company CONTACT: SABMiller, +44 20
7659 0100, or 414 931 2000, or Media Relations, Nigel Fairbrass,
+44 7799 894265, or Investor Relations, Gary Leibowitz, +44 7717
428540, both of SABMiller; or Media Relations, Paul de la Plante,
+1-514-843-2332, or Investor Relations, Dave Dunnewald,
+1-303-927-2334, or Investor Relations, Jane Armstrong,
+1-303-927-2394, all of Molson Coors Brewing Company Web Site:
http://www.coors.com/
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