DENVER, April 28 /PRNewswire-FirstCall/ -- Molson Coors Brewing Company
(NYSE: TAP; Toronto) today announced higher consolidated net sales and sales
volume for the first quarter of 2005 compared to the first quarter of 2004,
but reported a net loss in the 2005 first quarter. The net loss was primarily
attributable to lower sales volume in key markets versus a year earlier and
special charges related to the recent Molson Coors merger totaling $40.7
million in the first quarter of 2005.
The company's 2005 first quarter results include the business of Molson
Inc. following the completion of the merger on Feb. 9, 2005, compared to the
first quarter of 2004, which includes only the results of the former Adolph
Coors Company. The company's reported consolidated sales volume and net sales
increased in the 2005 first quarter compared to the first quarter 2004 due to
the combination of the Molson and Coors businesses.
For the 13-week first quarter ended March 27, 2005, the merged company
reported net sales of $1.1 billion and sales volume of 8,094,000 barrels, or
9,497,985 hectoliters (HLs). The company reported a net loss of
$46.5 million, or $0.74 per share, during the 2005 first quarter. Excluding
special items, the company reported an after-tax loss of $5.1 million during
the 2005 first quarter. (See the company's website, www.molsoncoors.com for
reconciliation to the nearest U.S. GAAP measure.)
For a more meaningful view of underlying business trends, the company
provided the following pro forma results by operating segment, based on
comparable time periods that correspond to the company's thirteen-week periods
in both years reported, except for Brazil which uses the December to February
period in both years (see Note 4):
Molson Coors Brewing Company Pro Forma Segment Highlights
Comparable basis, pro forma combined, U.S. GAAP
2005 1st Quarter % increase/(decrease)
vs. 1st quarter 2004 ($ in millions)
Canada(1) U.S.(2) Europe(3) Brazil(4) Corporate Consolidated
Sales
to Retail (4.8%) (1.6%) (6.0%) (7.1%) -- (3.9%)
Sales
Volume (7.2%) (4.1%) (6.0%) (7.1%) -- (5.6%)
Net Sales
($) $297 $531 $327 $93 -- $1,248
Net Sales
(%) (2%) (2%) (17%) 11% -- (6%)
Net
Revenue/bbl 5.4% 2.3% (11%) 19% -- 0%
COGS ($) ($154) ($335) ($224) ($66) -- ($779)
COGS/bbl 11% 2% (15%) 12% -- (1%)
MG&A ($) ($101) ($174) ($109) ($42) ($12) ($439)
MG&A (%) 21% (2%) 1% 21% 44% 6%
Special
Items -- ($7) ($4) ($19) ($54) ($84)
Operating
Income
(Loss) ($) $41 $15 ($10) ($34) ($66) ($54)
Operating
Income (%) (40%) (32%) (416%) 139% 675% (175%)
Pretax
Income
(Loss) $41 $15 ($10) ($38) ($104) ($96)
Pretax
Income
(Loss)
Excluding
Special
Items ($) $41 $23 ($7) ($18) ($51) ($12)
Pretax Income
Excluding
Special
Items (%) (44%) (3%) (242%) 17% 7% (131%)
(1) Canada includes former Canadian operations and volumes, less Molson
USA results and volumes, plus Coors Canada results historically
shared with the U.S. operations under joint venture arrangements.
(2) U.S. includes former U.S. operations and volumes, plus Molson USA
results and volumes, less Coors Canada results historically shared
with the Canadian operations under joint venture arrangements.
U.S. now excludes the volumes and results from the company's Asia
operations.
(3) Europe includes former U.K. operations and volumes, plus the results
and volumes from the company's Asia operations.
(4) Brazil includes former Brazil operations and volumes for December
through February in both periods presented. For financial reporting
purposes, Brazil results will be reported one month in arrears.
On a pro forma basis, the company reported a consolidated net loss of
$79 million, or $0.91 per share, based on 86.2 million pro forma diluted
shares outstanding during the 2005 first quarter.
Leo Kiely, Molson Coors president and chief executive officer, said, "The
common underlying cause for difficult first quarter results was the lack of
volume growth in each of our major markets. While disappointing, this
performance reinforces the importance of integrating the operations and
organization of the combined company, so we can capitalize on our new
strengths and build an even more competitive and profitable global enterprise.
"Our synergy work is well underway, and since the completion of the merger
on Feb. 9, we have taken major steps to establish our new leadership team. As
we now head into our key selling season in our biggest markets, we are focused
on driving volume and market share growth this summer."
Canada Segment
Pro forma Canada segment net sales were $297 million, down from
$303 million in the first quarter of 2004. Pro forma sales volume of
1,570,000 barrels (1,842,330 HLs) was down from 1,691,000 barrels (1,984,320
HLs) a year ago. Canada segment pro forma sales to retail were down
4.8 percent during the first quarter 2005 compared to a year ago largely due
to declines in the overall market for premium brands such as Molson Canadian
and Molson Dry. Coors Light sales to retail in Canada grew at a
low-single-digit rate during the quarter. Canada segment pro forma pretax
income decreased 44 percent in the first quarter of 2005 from the prior year.
Kiely added, "We have a number of initiatives underway in Canada to regain
volume momentum, including fully integrated marketing programs and strategies
as evidenced by significantly increased investment in new advertising copy and
product news, such as Molson Kick and Molson Canadian Sub Zero."
United States Segment
In the first quarter 2005, pro forma net sales in the U.S. segment
decreased 2 percent from the first quarter a year ago. The company's U.S.
business faced continued softness in the beer industry, aggravated by
increased interest in spirits brands, especially in on-premise channels. The
company's U.S. business also faced significant cost pressures, primarily
continued industry-wide increases in freight and packaging-material rates, as
well as the de-leveraging of fixed costs due to the lower sales volume,
partially offset by continued progress on cost saving and productivity
initiatives in U.S. operations. Pro forma U.S. pretax earnings decreased
35 percent from a year earlier.
Excluding a special charge of $7 million pretax, primarily merger-related
costs, pro forma pretax earnings would have declined 3 percent to $23 million.
"A slight decline in our U.S. sales to retail reflects weak industry
volume conditions," Kiely added. "Nevertheless, we are heading into our peak
season in the U.S. with a focus on regaining volume growth on Coors Light with
continued success in key channels, such as our gains in chain accounts and
improvements in Hispanic markets, new advertising copy -- which has been well
received among our U.S. distributors -- as well as product and packaging
innovations directed at adding focused excitement for the key summer selling
season."
Europe Segment
In the first quarter 2005, Europe segment net sales decreased 17 percent
from the first quarter of 2004. Sales volume decreased 6.0 percent versus a
year ago. Excluding special charges, the company reported a $7 million pretax
loss in Europe for the 2005 first quarter.
"The U.K. beer industry as a whole was impacted negatively by very weak
consumer demand," Kiely said. "In addition, our off-trade business in the
U.K. lapped a substantial inventory build in the first quarter last year in
advance of an excise tax increase, and in the on-trade, our major competitors
are responding aggressively with product entries in the 'extra cold' beer
category due to the success of Carling Extra Cold.
"Though, as in our U.S. and Canada segments, the first quarter is the
smallest quarter of the year for our U.K. business, we are working to
re-establish volume momentum with expanded distribution in key multiple
on-trade accounts. We're also increasing distribution through entry into new
markets, such as our recent introduction of Coors Fine Light Beer in Russia."
Brazil Segment
Pro forma Brazil segment net sales during the first quarter increased
11 percent from the first quarter of 2004. Pro forma sales volume of
2,212,000 barrels (2,595,700 HLs) declined 7.1 percent versus a year ago.
Sales for the portfolio's lead brand, Kaiser, which accounts for more than
three quarters of the company's Brazil business sales, decreased at a
low-single-digit rate. Excluding special charges, the Brazil segment reported
a first quarter pro forma pretax loss of $18 million, compared to a loss of
$16 million in the same period a year ago.
"We are continuing a detailed assessment of our Brazil operations and are
evaluating all of our options for the future of this business. Our evaluation
of the Brazil business has focused on the health of the Kaiser brand, our
ability to reduce overall costs and, consequently, our ability to
significantly improve the profitability and cash flow of the business.
Additionally, we are assessing the overall alignment with our key partners in
Brazil. While this review is still underway, volume trends have improved
somewhat over the past several months but are still negative. We will be
reviewing the results with the company's Board of Directors in May, and we're
committed to sharing more details with our stockholders as soon as our plans
have been finalized."
Special Items
The company's reported special charges totaled $40.7 million during the
2005 first quarter, including $7.4 million of merger-related special charges
in the U.S. segment for restructuring costs and accelerated depreciation on
the company's Memphis brewery, which will be closed during the next two years;
a $3.6 million write-off of obsolete brewery assets in the Europe segment; and
Corporate segment special charges totaling $29.6 million, primarily due to
change-in-control payments and benefits for 12 Coors officers who elected to
leave the company following the merger.
The company's pro forma results include additional special charges
totaling $43 million, including merger-related corporate expenses of
$24 million, and $19 million in charges related to the closure of sales
offices and brewing operations in Brazil.
Molson Coors Brewing Company will conduct a conference call with financial
analysts and investors at noon Eastern Time today to discuss the company's
year-end and first quarter financial results. A live webcast of the
conference call will be accessible via the company's website,
www.molsoncoors.com. An online replay of the conference call webcast will be
available within two hours following the live webcast until 11:59 p.m. Eastern
Time on May 28, 2005.
(Summary of Operations Attached)
Forward-Looking Statements
This press release includes "forward-looking statements" within the
meaning of the federal securities laws, and language indicating trends, such
as "continued success," "progress," and "underlying business trends." It also
includes financial information, of which, as of the date of this press
release, the Company's independent auditors have not completed their review.
Although the Company believes that the assumptions upon which the financial
information and its forward-looking statements are based are reasonable, it
can give no assurance that these assumptions will prove to be correct.
Important factors that could cause actual results to differ materially from
the Company's projections and expectations are disclosed in the Company's
filings with the Securities and Exchange Commission. These factors include,
among others, changes in consumer preferences and product trends; price
discounting by major competitors; unanticipated expenses, margin impact and
other factors resulting from the recent merger; failure to realize anticipated
results from synergy initiatives; and increases in cost generally. All
forward-looking statements in this press release are expressly qualified by
such cautionary statements and by reference to the underlying assumptions. We
do not undertake to publicly update forward-looking statements, whether as a
result of new information, future events or otherwise.
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - CONSOLIDATED
1st QUARTER 2005
(Unaudited)
Thirteen Weeks Ended
March 27, March 28,
(In thousands, except per share data) 2005 (3) 2004
Barrels of beer and other
beverages sold 8,094 7,040
Sales -- domestic and international $1,429,437 $1,235,170
Beer excise taxes (365,292) (311,177)
Net sales 1,064,145 923,993
Costs and expenses:
Cost of goods sold (700,114) (611,744)
Gross profit 364,031 312,249
Marketing, general and administrative (344,021) (283,777)
Special charges (40,700) --
Operating (loss) income (20,690) 28,472
Other expense - net (5,874) (1,855)
Interest expense - net (21,827) (15,538)
(Loss) Earnings before income taxes (48,391) 11,079
Income tax benefit (expense) 3,339 (3,733)
(Loss) Earnings before minority
interest (45,052) 7,346
Minority interest (1) (1,486) (2,506)
Net (loss) income (2) $(46,538) $4,840
Net (loss) income per share (basic) $(0.74) $0.13
Net (loss) income per share (diluted) $(0.74) $0.13
Weighted average number of shares o/s
(basic) 63,106 36,664
Weighted average number of shares o/s
(diluted) 63,106 37,277
Cash dividends declared per share $0.32 $0.205
(1) Minority interest is the minority owners' share of income in 2004
and 2005 generated by the Rocky Mountain Bottle Company (RMBC), Rocky
Mountain Metal Container (RMMC), and Grolsch NV (Grolsch) joint
ventures. 2005 minority interest also includes the minority owners'
share of loss attributable to the Brazil business.
(2) Purchase accounting, which is preliminary as of March 27, 2005,
could result in additional income or loss that these results do not
reflect on an annualized basis when finalized in subsequent
reporting periods.
(3) Shares outstanding at December 26, 2004 totaled 37.7 million and were
85.3 million at March 27, 2005, largely as a result of the merger.
NOTE: All results prior to February 9, 2005, exclude Molson Inc., which
merged with Adolph Coors Company on that date.
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - CANADA
1st QUARTER 2005
(Unaudited)
Thirteen Weeks Ended
March 27, March 28,
(In thousands) 2005 (1) 2004 (2)
Barrels of beer and other
beverages sold 875 --
Sales -- domestic and international $239,323 $12,463
Beer excise taxes (42,992) --
Net sales 196,331 12,463
Costs and expenses:
Cost of goods sold (134,163) --
Gross profit 62,168 12,463
Marketing, general and administrative (45,787) 36
Operating income 16,381 12,499
Other expense -- net (706) --
Earnings before income taxes $15,675 $12,499
(1) 2005 results include a full consolidated presentation of Molson's
Canadian beer business from February 9, 2005, (the date of the
merger) until March 27, 2005. For the period prior to the merger
the segment includes only Coors' one-half share of the Coors Light
business in Canada, operated through a joint venture, previously
reported in the Americas segment.
(2) 2004 results include Coors' one-half share of the Coors Light
business in Canada, operated through a joint venture, previously
reported in the Americas segment.
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - UNITED STATES
1st QUARTER 2005
(Unaudited)
Thirteen Weeks Ended
March 27, March 28,
(In thousands) 2005 2004
Barrels of beer and other
beverages sold 4,794 4,869
Sales -- domestic and international $610,859 $606,936
Beer excise taxes (85,886) (87,033)
Net sales 524,973 519,903
Costs and expenses:
Cost of goods sold (331,427) (331,196)
Gross profit 193,546 188,707
Marketing, general and administrative (171,479) (169,075)
Special charges (7,447) --
Operating income 14,620 19,632
Other income -- net 76 1,206
Earnings before income taxes (1) $14,696 $20,838
(1) Earnings before income taxes includes $2,103 and $2,401 in 2005 and
2004, respectively, of the minority owners' share of income
attributable to the RMBC and RMMC joint ventures.
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - EUROPE
1st QUARTER 2005
(Unaudited)
Thirteen Weeks Ended
March 27, March 28,
(In thousands) 2005 2004
Barrels of beer and other
beverages sold 2,041 2,171
Sales -- domestic and international $545,854 $615,771
Beer excise taxes (218,723) (224,144)
Net sales 327,131 391,627
Costs and expenses:
Cost of goods sold (224,054) (280,548)
Gross profit 103,077 111,079
Marketing, general and administrative (109,136) (108,009)
Special charge (3,629) --
Operating (loss) income (9,688) 3,070
Other expense -- net (4,353) (2,476)
Interest income -- net 3,576 4,228
(Loss) Earnings before income taxes (1) $(10,465) $4,822
(1) (Loss) Earnings before income taxes in 2005 includes $565
($440, net of tax) and 2004 includes $779 ($545, net of tax) of the
minority owners' share of income attributable to the Grolsch joint
venture.
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - BRAZIL
1st QUARTER 2005
(Unaudited)
Thirteen Weeks Ended
March 27, March 28,
(In thousands) 2005 (1) 2004
Barrels of beer and other beverages
sold 384 --
Sales - domestic and international $33,401 $--
Beer excise taxes (17,691) --
Net sales 15,710 --
Costs and expenses:
Cost of goods sold (10,470) --
Gross profit 5,240 --
Marketing, general and
administrative (6,651) --
Operating loss (1,411) --
Other expense - net (9) --
Interest expense - net (1,162) --
Loss before income taxes (2) $(2,582) $--
(1) The Brazil segment's results are reported from February 9, 2005, the
effective date of the merger with Molson, Inc. The Brazil segment is
reported one month in arrears. Accordingly, the amounts above
represent results for the 20 days ended February 28, 2005. The
second quarter for the Brazil segment will include results for the
months of March, April, and May.
(2) Loss before income taxes include $737 of the minority owners' share
of losses attributable to the Brazil business.
MOLSON COORS BREWING COMPANY
SUMMARY OF OPERATIONS - CORPORATE
1st QUARTER 2005
(Unaudited)
Thirteen Weeks Ended
March 27, March 28,
(In thousands) 2005 2004
Barrels of beer and other
beverages sold -- --
Sales -- domestic and international $-- $--
Beer excise taxes -- --
Net sales -- --
Costs and expenses:
Cost of goods sold -- --
Gross profit -- --
Marketing, general and administrative (10,968) (6,729)
Special charges (29,624) --
Operating loss (40,592) (6,729)
Other expense - net (882) (585)
Interest expense - net (24,241) (19,766)
Loss before income taxes (1) $(65,715) $(27,080)
(1) Loss before income taxes includes $320 and $440 in 2005 and 2004,
respectively, of the minority owners' share of interest expense
attributable to debt obligations of the RMMC joint venture.
SOURCE Molson Coors Brewing Company
04/28/2005
CONTACT: Media, Sylvia Morin, +1-514-590-6345, or Investor Relations,
Dave Dunnewald, +1-303-279-6565, or Kevin Caulfield, +1-303-277-6894, all of
Molson Coors Brewing Company
Web site: http://www.coors.com
Web site: http://www.molsoncoors.com