Molson Coors Q1 Profit Surges Despite Lower Sales

Molson Coors Brewing Company

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(RTTNews) - Molson Coors Brewing Co. (TAP-A, TAP) on Wednesday reported a surge in profit for the first quarter from last year, reflecting a benefit on the early termination of a joint venture in Canada as well as lower costs and expenses that helped offset a decline in sales. Meanwhile, sales for the quarter missed analysts' estimates.

Denver, Colorado-based Molson Coors, which makes Coors Light and Blue Moon beers, posted net income attributable to the company for the first quarter of $163.4 million or $0.88 per share, up from $28.5 million or $0.16 per share in the same period last year.

In the latest quarter, Molson Coors recognized special items resulting in a benefit of net $52.5 million pretax, largely driven by $63.2 million received from Modelo for the early termination of the Modelo Molson joint venture in Canada.

This was partially offset by a charge of $4.9 million related to the accelerated amortization of the remaining carrying value of the Modelo brand intangible asset in Canada. Additionally, the company recognized charges of $5.8 million during the quarter related to restructuring programs.

Underlying after-tax income for the latest quarter were $102.2 million or $0.55 per share, compared with $47.5 million or $0.26 per share in the year-ago period. On average, five analysts polled by Thomson Reuters expected earnings of $0.35 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter declined 2 percent to $816.0 million from $828.5 million in the prior-year period, but edged up 0.3 percent on a currency basis. Analysts had a consensus revenue estimate of $818.43 million for the quarter.

Molson Coors' global beer volume for the quarter edged down 0.1 percent from last year to 11.92 million hectoliters.

Molson Coors said its underlying pre-tax income in Canada for the quarter rose 21 percent from the year-ago period, reflecting higher net pricing and lower marketing, general and administrative expenses. Underlying pre-tax income in Europe rose to $16.2 million on volume growth, cost savings, and a $2.8 million benefit from favorable currency movements.

The company's cost of goods sold for the quarter declined 4 percent to $523.2 million, while marketing, general and administrative expenses decreased 10 percent to $263.9 million.

At the U.S. operations - MillerCoors LLC, a joint venture between Molson Coors and SABMiller Plc. (SAB.L, SABMRY.PK) - net income attributable to the company for the first quarter increased to $291.2 million from $271.9 million in the same period last year.

Underlying earnings for the quarter rose 7.4 percent to $291.9 million from $271.9 million in the year-ago period. The results at MillerCoors were led by driven by positive pricing and sales mix, cost savings, and lower marketing spending primarily due to timing differences compared to last year.

Net sales for the quarter edged up 0.1 percent to $1.790 billion from $1.788 billion last year. The company sells beers such as Miller Lite and Coors Lite in the U.S.

Total company net revenue per barrel, including contract brewing and company-owned distributor sales, increased 3.4 percent. Domestic net revenue per barrel grew 3.3 percent as a result of favorable net pricing and positive brand mix.

TAP closed Tuesday's trading at $59.77, down $0.78 or 1.29 percent on a volume of 755,271 shares.