MONTREAL - The introduction of three new Canadian beer brands has helped Molson Coors Brewing Company to reduce the economic downturn's impact on sales volumes, the company's chief executive said Tuesday.
Increased spending on Molson M, Molson Canadian 67 and Rickard's Dark contributed to a 12-per-cent drop in pretax Canadian earnings. Including a 15 per cent appreciation of the Canadian dollar, earnings fell 5.3 per cent to US$94.5 million.
"Our brand work is beginning to give us the portfolio we require to improve (market) share and revenue performance in Canada going forward," CEO Peter Swinburn said Tuesday during a conference call.
The Montreal and Denver-based brewer's overall fourth-quarter profit more than doubled because of favourable tax benefits even as it sold fewer beers.
Worldwide volume sold of the company's beers, including Blue Moon and Coors Light, fell four per cent as people cut back on their purchases. Still, higher prices helped drive an 11 per cent rise in net sales to $820.8 million.
Shares listed on the New York Stock Exchange (NYSE:TAP) decreased $1.32 to $39.99 in afternoon trading. Molson Coors Canada shares listed on the Toronto Stock Exchange (TSX:TPX.B) fell C$1.23, or 2.74 per cent, to $43.62.
Molson Coors has seen sales slip in its strongholds of Canada and Britain amid weak economies.
People are feeling pinched so they're less likely to splurge on items like beer or go out to bars and restaurants. That's forcing companies to drop their prices to compete, but Molson Coors has held firm on some pricing, particularly in Britain, so it can make more money on the products it does sell.
The brewer earned $218.2 million, or $1.17 per share in the quarter ending Dec. 26. That's up from $87.6 million, or 48 cents per share, in last year's fourth quarter.
Without one-time items, the company earned $190.3 million, or $1.02 a share.
Analysts predicted earnings per share of $1.10 on revenue of $784.4 million, according to Thomson Reuters. They typically exclude one-time items from their estimates.
In Canada, sales to retailers fell 1.2 per cent in the quarter, slightly better than the industry there. Costs fell three per cent as prices to make and sell beer dropped. Coors Light grew, but Molson Canadian, Dry and export brands fell.
While the industry saw sales fall by 1.9 per cent, Molson Coors saw its market share grow by one-quarter percentage point. Ontario, Quebec and Atlantic Canada, which account for about 75 per cent of its Canadian sales, were the best performing regions.
Molson Canada president Dave Perkins said the new beer brands help the brewer to better cover a variety of consumer occasions.
"Because we're not able to say with certainty what the trends across segments will be, I think it's important to have a portfolio that can deal with the movements that we see going on these days," Perkins told analysts.
The premium beer segments, which includes Coors Light, Molson Canadian, M and Molson Canadian 67 is the company's most important. But it claims to have enhanced its top end offering with Rickard's Dark and the value area with Keystone in Ontario and west.
Ann Gilpin of Morningstar said the results were slightly above forecast but were marked by weak revenue momentum.
"We are encouraged to see the reversal of its market share losses in Canada, but we continue to believe the Canadian and U.S. beer markets will remain weak in 2010 because of subdued consumer spending," she said in a report.
Molson Coors also netted $46 million from the sale of its 19.9 per cent share of the Montreal Canadiens to a consortium led by the Molson family.
In Britain, volume fell 9.3 per cent in the quarter, far ahead of the industry's four per cent drop. Molson Coors' decision to hold firm on pricing also contributed to the decline. The cost of making beer there increased 12 per cent in local currency.
In the U.S., where the company has its MillerCoors joint venture with SABMiller's U.S. unit, sales to retailers fell 3.6 per cent. Net revenue decreased 1.6 per cent to $1.71 billion, although pricing was strong.
Swinburn said he expects the weak sales volumes to continue, especially in the first half of the year.
"But we are focused on continuing to establish a strong brand base to our business that ensures we not only manage the current market but that we take full advantage of revenue upsides when momentum improves," Swinburn said.
