Brewer Delivers Strong Underlying Profit Growth Despite Challenging
Economic and Industry Conditions LONDON and DENVER, Nov. 4
/PRNewswire-FirstCall/ -- Driven by strong revenue growth, cost
management and continued synergy delivery, SABMiller plc (SAB.L)
and Molson Coors Brewing Company (NYSE: TAP; TSX) today reported
double-digit profit growth for MillerCoors for the quarter ended
September 30, 2009. "We are delivering our synergies, controlling
costs and managing revenue for sustainable profit growth," said
MillerCoors CEO Leo Kiely. "In this challenging economic
environment, we're also realizing the benefit of a well balanced
portfolio that offers consumers choice and variety in all
segments." Key operating results for the third quarter are compared
to the prior year quarter and include MillerCoors operations in the
U.S. and Puerto Rico. THIRD QUARTER 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 28.1% to $244.4
million versus the prior year comparable quarter -- Total net
revenue increased 3.1% to $2.01 billion -- Domestic net revenue per
barrel increased 3.7% -- Cost of goods sold (COGS) per barrel
increased 3.5% -- $73 million delivered in cost synergies versus
the prior year comparable quarter, bringing year-to-date synergy
total to $183 million and cumulative synergies since July 1, 2008,
to $211 million -- Marketing, general and administrative costs
decreased 4.5% MillerCoors domestic sales-to-retailers (STRs) were
down 1.3 percent due to a slight decline in premium light volumes
and continued softness in above premium and premium brands.
Domestic sales-to-wholesalers (STWs) fell 0.7 percent, primarily
driven by lower retail sales. Pricing remained strong in the third
quarter, as domestic net revenue per barrel, excluding contract
brewing and company-owned distributor sales, increased 3.7 percent
driven by sustained price increases taken in the fall of 2008 and
reductions in discount activity. Premium light brand volumes
(Miller Lite, Coors Light, MGD 64) were down low-single digits
largely due to a decline in Miller Lite, which was partially offset
by MGD 64 growth. Miller Lite STRs were down mid-single digits and
Coors Light STRs were down slightly. MGD 64 continued to perform
well ahead of expectations, achieving STRs of nearly three quarters
of a million barrels year to date. In a challenging market,
MillerCoors craft and import portfolio grew slightly during the
quarter, led by high-single-digit growth of Blue Moon and
low-single-digit growth of Peroni Nastro Azzurro. The domestic
above-premium portfolio - which includes Miller Chill, Sparks and
Killian's Irish Red - experienced a double-digit decline. The below
premium portfolio was up low-single digits, largely due to the
strong performance of Keystone Light and continued growth of Miller
High Life, which more than offset declines in Milwaukee's Best. The
premium regular portfolio - which includes MGD and Coors Banquet -
was down double digits. MillerCoors total net revenue increased 3.1
percent to $2.01 billion versus the prior year comparable quarter,
driven by domestic net pricing. Excluding contract brewing and
company-owned distributor sales, domestic net revenue increased 3.0
percent to $1.87 billion. Third-party contract brewing volumes
declined 4.6 percent, though profits were up slightly from the
prior-year comparable quarter. Cost of goods sold per barrel
increased 3.5 percent as benefits from MillerCoors cost leadership
programs were more than offset by brewing and packaging materials
cost increases under procurement contracts largely arranged prior
to more recent commodity market price reductions. Marketing,
general and administrative costs decreased 4.5 percent, driven
primarily by lower organizational costs and synergies, which were
partially offset by IT integration-related expenses. For the
quarter, underlying net income attributable to MillerCoors
(excluding special items) increased 28.1 percent to $244.4 million
versus the prior-year comparable quarter. Depreciation and
amortization expenses for MillerCoors in the third quarter were
$72.9 million and additions to tangible and intangible assets
totaled $79.5 million. During the third quarter of 2009,
MillerCoors reported special charges totaling $14.7 million, which
include pension curtailment and integration expenses. INTEGRATION
AND COST SYNERGIES MillerCoors achieved $73 million in synergies in
the third quarter largely due to marketing synergies, as well as
organizational savings resulting from the elimination of duplicate
and transitional positions in the third quarter 2008. Network
optimization savings continue to be realized from shifting
production of Coors and Miller brands into the larger MillerCoors
brewery network, a process which will continue for the next nine
months. MillerCoors continues to integrate business processes and
systems across the enterprise to deliver enhanced customer
solutions and better leverage the scale of the business.
MillerCoors has delivered $183 million in synergies this year,
bringing the total to $211 million since beginning operations on
July 1, 2008. The company now expects to achieve $270 million of
cumulative synergies by the end of calendar year 2009, surpassing
its original commitment of $225 million. As previously
communicated, MillerCoors will deliver incremental cost savings
above its $500 million synergy target, and approximately $200
million in cost savings are expected to be delivered by the end of
2012, approximately in line with current market expectations. These
cost savings include efficiencies in production costs, procurement,
and marketing, general and administrative expense. 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 create 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 and distribution agreements across six
continents. The group's wide portfolio of brands includes premium
international beers such as Grolsch, Miller Genuine Draft, Peroni
Nastro Azzurro and Pilsner Urquell, as well as market-leading local
brands such as Aguila, Castle, Miller Lite, Snow and Tyskie.
SABMiller plc is also one of the largest bottlers of Coca-Cola
products in the world. In the year ended March 31, 2009, the group
reported $3,405 million adjusted pre-tax profit and group revenue
of $25,302 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/. 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, 2009, 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.
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 in accordance with IFRS. 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 for the first six months are presented on a pro
forma basis. Adjustments have been made to reflect comparative data
including amortization of definite life intangible assets
MillerCoors Reconciliation of US GAAP Net Income to Underlying Net
Income (non-GAAP measure) and to EBITA, calculated under IFRS,
noting that first half 2008 numbers are Pro Forma. MillerCoors
Three Months Ended Nine Months Ended
-----------------------------------------
----------------------------------------- (In millions of $US) Sept
30, Sept 30, Sept 30, Sept 30, 2009 2008 2009 2008
----------------------------------------- US -GAAP: Net Income
229.7 168.2 740.6 479.4 -------------------- Plus: Special items(1)
14.7 22.6 45.5 138.7 Non - GAAP Underlying Net Income 244.4 190.8
786.1 618.1 ------------------------- Plus: Adjustments to arrive
at IFRS Underlying EBITA(2) 45.2 21.8 106.5 73.4 IFRS: MillerCoors
underlying earnings before interest, taxes and amortization before
exceptional items (EBITA(3) 289.6 212.6 892.6 691.5
-------------------------------- Percent change vs. prior year
MillerCoors pro-forma underlying EBITA(3) 36.2% 29.1% (1) Current
year special items include integration charges related to the
MillerCoors Joint Venture, and charges for pension curtailment.
Prior year special items include integration charges, asset
impairment charges, and a loss on sale of a company owned
distributorship. (2) US - GAAP Underlying Net Income to IFRS EBITA
adjustments relate to differing treatment of step-up depreciation,
pension, post retirement benefits, consolidation of container joint
ventures, asset disposal, deferred taxes, share based compensation
and severance expenses between US - GAAP and IFRS. Amortization 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 Nine Months
Ended ---------------------- ------------------- Sept 30, Sept 30,
Sept 30, Sept 30, 2009 2008 2009 2008 -------- -------- --------
--------- Actual Actual Actual Pro Forma ------ ------ ------
-------- 18,441 18,646 53,687 54,539 Volume in barrels ======
====== ====== ====== Sales 2,350.7 2,293.4 6,855.8 6,710.2 Excise
Taxes (341.2) (343.7) (993.7) (1,004.1) ------ ------ ------
--------- Net Sales 2,009.5 1,949.7 5,862.1 5,706.1 Cost of Goods
Sold (1,266.6) (1,236.9) (3,618.8) (3,513.7) Gross profit 742.9
712.8 2,243.3 2,192.4 Marketing, General and Administrative
Expenses (496.0) (519.1) (1,438.4) (1,566.2) Special Items (net)
(14.7) (22.6) (45.5) (138.7) Operating Income 232.2 171.1 759.4
487.5 Other Income (Expense), net 2.3 2.3 1.6 7.1 --- --- --- ---
Income before Income Taxes and Minority Interests 234.5 173.4 761.0
494.6 Income Tax Expense (2.3) (1.9) (6.9) (1.9) ---- ---- ----
---- Net Income 232.2 171.5 754.1 492.7 Net income attributable to
Non-controlling interest (2.5) (3.3) (13.5) (13.3) ---- ---- -----
----- Net Income Attributable to MillerCoors LLC 229.7 168.2 740.6
479.4 ===== ===== ===== ===== DATASOURCE: SABMiller; Molson Coors
CONTACT: SABMiller, +44 20 7659 0100/ 414 931 2000, or Nigel
Fairbrass, Media Relations, Mobile, +44 7799 894265, or Gary
Leibowitz, Investor Relations, Mobile, +44 7717 428540, all of
SABMiller; or Colin Wheeler, Media Relations, +1-303-927-2443, or
Dave Dunnewald, Investor Relations, +1-303-927-2334, or Leah
Ramsey, Investor Relations, +1-303-927-2397, all of Molson Coors
Web Site: http://www.sabmiller.com/ http://www.molsoncoors.com/
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