News Details

LONDON & DENVER--(BUSINESS WIRE)--SABMiller plc (LN:SAB; OTC:SABMRY) and Molson Coors Brewing Company (NYSE: TAP; TSX: TPX) reported that MillerCoors second quarter underlying net income declined 3.8 percent to $468.8 million versus the same period in the prior year. This decline was driven primarily by the timing of shipments due to year-over-year calendar shifts, partially offset by lower cost of goods sold, higher net pricing and positive sales mix. First half underlying net income, which was not as significantly affected by the timing of shipments, increased 6.2 percent. For the second consecutive quarter Coors Light^* and Miller Lite together delivered flat sales-to-retail (STR) volume in a declining segment, while overall MillerCoors STR volume decreased 1.7% in the second quarter, driven primarily by the company’s Below Premium brands.

“For the first time in many years, we are in line with our volume expectations through the first half of the year,” said Gavin Hattersley, MillerCoors Chief Executive Officer. “The second quarter started slow, but we finished strongly in June, driven by our two American Light Lagers, Coors Light and Miller Lite. Another indication of the positive traction we’ve gained was finishing No. 1 in the 2016 Tamarron Supplier Survey – which polls hundreds of U.S. distributors in rating the performance of beer, wine and spirit suppliers – for the first time in the history of the joint venture. Our entire system is energized by our performance and we are all looking forward to continuing our hard work to deliver a successful summer selling season.”

Second Quarter Highlights

Unless otherwise indicated, all amounts are in U.S. dollars and calculated in accordance with generally accepted accounting principles in the U.S. (U.S. GAAP). All market share references are per A.C. Nielsen. Percentages are versus the prior year comparable period and include MillerCoors operations in the U.S. and Puerto Rico.

• U.S. GAAP net income was $429.5 million, down 11.8 percent, driven by special items related to the closure of the Eden Brewery, as well as the timing of shipments due to year-over-year calendar shifts.
• IFRS EBITA decreased 3.3 percent to $492.9 million.
• Underlying net income, a non-GAAP measure, decreased 3.8 percent to $468.8 million.
• Total net sales decreased 3.5 percent to $2.127 billion.
• Domestic net revenue per barrel, excluding contract brewing and company-owned distributor sales, increased 0.7 percent.
• Total cost of goods sold (COGS) per barrel decreased 1.3 percent.
• Domestic sales-to-retail volume (STRs) decreased 1.7 percent.
• Domestic sales-to-wholesalers volume (STWs) decreased 4.4 percent.

Brand Highlights for the Second Quarter

Coors Light^* and Miller Lite combined to deliver flat STR volume for the second consecutive quarter. However, total MillerCoors Premium Light STRs finished the quarter down low-single digits, driven by the discontinuation of Coors Light Citrus Radler and a high-single-digit decline of Miller64.

Miller Lite gained share of the Premium Light segment for the seventh consecutive quarter and STRs were flat. The brand’s strong performance can be attributed in part to its “Spelled different because it’s brewed different” marketing campaign, as well as its “Americana” packaging, which was launched in May to drive display and features during key weekends in summer.

Coors Light^* gained share of the Premium Light segment for the fifth consecutive quarter, and STRs were up low-single digits in the quarter, which was its best quarterly performance since the fourth quarter of 2012. The brand continues to build momentum as beer drinkers respond positively to its new positioning, which celebrates the perseverance that makes climbing your personal mountain worthwhile. The “Climb On” advertising that supports this positioning launched in late January, and additional marketing plans have followed, including the Coors Light summer virtual reality on premise and Full Court reFresh programs. In addition, the brand’s conversion to its new visual identity continued its successful rollout across all consumer touchpoints.

Total MillerCoors Above Premium STRs finished down low-single digits, despite continued growth from Henry’s Hard Soda. According to Nielsen, Henry’s was the No. 1 Hard Soda franchise in the quarter with Henry’s Hard Orange the No. 1 orange and Henry’s Ginger Ale the No. 1 ginger ale. The Redd’s family declined mid-single digits, as double-digit growth of the Wicked brands and the introduction of Blueberry Ale were more than offset by declines across the balance of the Redd’s portfolio.

The MillerCoors Tenth & Blake portfolio finished the quarter down mid-single digits. The Blue Moon Brewing Company STRs declined mid-single digits, led by double-digit declines in Blue Moon seasonals. The Jacob Leinenkugel Brewing Company STRs were down low-single digits partially offset by low-single digit growth from its Shandy portfolio, driven by Grapefruit Shandy. The continued success with this relatively recent product introduction means that now nine out of 10 shandies sold in the U.S. are from Leinenkugel’s.

In the Premium Regular segment, Coors Banquet gained segment share and grew STR volume low-single digits for the quarter and remains on target for a 10^th consecutive year of growth. According to Nielsen, Coors Banquet remains the only national Premium Regular brand that is growing, and the brand aims to continue its momentum through increased marketing investment and the new “How it’s Done” advertising campaign that reinforces its Western roots. The growth from Banquet partially offset a high-single digit decline for Miller Genuine Draft, resulting in the Premium Regular segment finishing down low-single digits for the quarter.

The MillerCoors Below Premium portfolio decreased mid-single digits for the quarter, driven by a high-single-digit decline of Milwaukee’s Best and mid-single-digit declines of Keystone and Miller High Life. While Icehouse grew low-single digits for the third consecutive quarter, the Steel Reserve franchise was down low-single digits, although the Steel Reserve Alloy Series grew mid-single digits for the quarter, led by Hard Pineapple.

Financial Highlights for the Second Quarter

Domestic net revenue per barrel grew 0.7 percent for the quarter as a result of favorable net pricing and positive sales mix.

Total company net revenue per barrel, including contract brewing and company-owned distributor sales, increased 0.6 percent for the quarter. Third-party contract brewing volumes were down 1.3 percent for the quarter.

Total COGS per barrel decreased 1.3 percent for the quarter, driven by supply chain cost savings and lower aluminum and fuel pricing. These factors were partially offset by brewery inflation and lower fixed-cost absorption due to lower volumes.

Marketing, general and administrative costs increased by 1.8 percent for the quarter, driven primarily by higher marketing investments and employee-related expenses.

MillerCoors achieved $22 million of cost savings in the quarter, primarily related to brewery efficiencies and procurement savings.

Depreciation and amortization expenses for MillerCoors were $116.0 million in the quarter. These results include accelerated depreciation related to the planned closure of the Eden, North Carolina, brewery of $33.0 million in the quarter that are included in special items. Additions to tangible and intangible assets totaled $90.9 million in the quarter.

Special items of $39.4 million for the quarter were related to the previously announced closure of the Eden Brewery, with further special items planned in the third quarter of 2016, when the closure is expected to be completed.

Overview of MillerCoors

Through its diverse collection of storied breweries, MillerCoors brings American beer drinkers an unmatched selection of the highest quality beers, flavored malt beverages and ciders, steeped in centuries of brewing heritage. Miller Brewing Company and Coors Brewing Company offer domestic favorites such as Coors Light, Miller Lite, Miller High Life and Coors Banquet. Tenth and Blake Beer Company, our craft and import division, offers beers such as Leinenkugel’s Summer Shandy from sixth-generation Jacob Leinenkugel Brewing Company and Blue Moon Belgian White from modern craft pioneer Blue Moon Brewing Company, founded in 1995. Tenth and Blake also imports world-renowned beers such as Italy’s Peroni Nastro Azzurro, the Czech Republic’s Pilsner Urquell and the Netherlands’ Grolsch. MillerCoors also operates Crispin Cider Company, an artisanal maker of pear and apple ciders using fresh-pressed American juice, and offers pioneering new brands such as the Redd’s Apple and Redd’s Wicked Apple franchises, Smith & Forge Hard Cider and Henry’s Hard Sodas. MillerCoors seeks to become America’s best beer company through an uncompromising dedication to quality, a keen focus on innovation and a deep commitment to sustainability. MillerCoors is a joint venture of SABMiller plc and Molson Coors Brewing Company. Learn more at MillerCoors.com, at facebook.com/MillerCoors or on Twitter through @MillerCoors.

Overview of SABMiller

SABMiller is in the beer and soft drinks business, bringing refreshment and sociability to millions of people all over the world who enjoy our drinks. The company does business in a way that improves livelihoods and helps build communities.

SABMiller is passionate about brewing and has a long tradition of craftsmanship, making superb beer from high quality natural ingredients. Our local beer experts brew more than 200 beers from which a range of special regional and global brands have been carefully selected and nurtured.

SABMiller is a FTSE-10 company, with shares trading on the London Stock Exchange, and a secondary listing on the Johannesburg Stock Exchange. At 31 March 2016, the group employed around 70,000 people in more than 80 countries, from Australia to Zambia, Colombia to the Czech Republic, and South Africa to the USA. Every minute of every day, more than 140,000 bottles of SABMiller beer are sold around the world. The group also has a growing soft drinks business as one of the world’s largest bottlers of Coca-Cola drinks.

In the year ended 31 March 2016, SABMiller sold 331 million hectolitres of lager, soft drinks and other alcoholic beverages, generating group net producer revenue of US$24,149 million and EBITA of US$5,810 million.

Further information is also available on:

www.sabmiller.com
www.facebook.com/sabmiller
www.twitter.com/sabmiller
www.youtube.com/sabmiller

Overview of Molson Coors

Molson Coors Brewing Company is a leading global brewer delivering extraordinary brands that delight the world's beer drinkers. It brews, markets and sells a portfolio of leading brands such as Coors Light, Molson Canadian, Carling, Staropramen and Blue Moon across The Americas, Europe and Asia. It operates in Canada through Molson Coors Canada; in the US through MillerCoors; across Europe through Molson Coors Europe; and outside these core markets through Molson Coors International. The company was listed on the Dow Jones World Sustainability Index for the past four years and named global Beverage Sector Leader in 2012 and 2013. In 2015, the company was the only alcohol producer recognized on the Index for World Class Sustainability performance. For more information on Molson Coors Brewing Company visit the company's website, http://molsoncoors.com or http://ourbeerprint.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 audit. 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, 2016, and in other documents which are available on SABMiller’s website at 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 cost saving 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. You should not place undue reliance on any forward-looking statement. 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 U.S. 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 as adopted by the European Union. 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 between companies.

______________________________
^* Excludes the discontinued Coors Light Citrus Radler.