Wrap Text
Millercoors delivers 9.5% underlying net income growth for 2012
SABMiller plc
JSEALPHA CODE: SAB
ISIN CODE: SOSAB
ISIN CODE: GB0004835483
MILLERCOORS DELIVERS 9.5% UNDERLYING NET INCOME GROWTH FOR 2012
Favorable Mix and Strong Pricing Drove Positive Full Year Results, Despite Q4 Profit Decline
February 14, 2013 (London and Denver) – SABMiller plc (LN:SAB; OTC:SABMRY) and Molson
Coors Brewing Company (NYSE: TAP; TSX: TPX) reported that MillerCoors underlying net
income grew 9.5 percent for the full year 2012 to $1.223 billion, while fourth quarter
underlying net income decreased 4.2 percent to $185.8 million versus the same quarter in
the prior year. Positive pricing and favorable sales mix drove strong profitability for the year,
while increased marketing investment reduced fourth quarter earnings.
“We delivered strong profit growth in 2012 while making significant marketing investments
in the fourth quarter behind our brands,” said MillerCoors Chief Executive Officer Tom
Long. “Our portfolio transformation strategy is delivering solid results. Coors Light, which is
undoubtedly the healthiest major beer brand in the market, continued to show momentum
and we led Craft share growth as Tenth and Blake delivered very strong results with Blue
Moon and Leinenkugel’s.”
Fourth Quarter and Full Year Highlights
Unless otherwise indicated, all amounts are in U.S. dollars and calculated in accordance with
U.S. GAAP. All percentages are versus the prior-year comparable period and include
MillerCoors operations in the U.S. and Puerto Rico. Quarterly sales-to-retailers (STRs)
results are presented on a trading-day-adjusted basis, as the fourth quarter of 2012 had one
more trading day compared with the same quarter in the prior year.
- Underlying net income (a non-GAAP measure) increased 9.5 percent to $1.223 billion
for the year and decreased 4.2 percent to $185.8 million for the fourth quarter.
- Total net sales increased 2.8 percent to $7.761 billion for the year and 1.7 percent to
$1.784 billion for the quarter.
- Domestic net revenue per barrel, excluding contract brewing and company-owned
distributor sales, increased 3.5 percent for the year and 2.9 percent for the quarter.
- Total cost of goods sold (COGS) per barrel increased 1.4 percent for the year and 1.6
percent for the quarter.
- Domestic STRs decreased 1.3 percent for the year and 1.1 percent for the quarter.
- Domestic sales-to-wholesalers (STWs) decreased 1.1 percent for the year and 1.3
percent for the quarter.
Brand Highlights for the Fourth Quarter and Full Year
Coors Light continued its momentum growing low-single digits for the quarter, outpacing
the total category and the Premium Light segment which lost share in a flat industry. The
brand enjoyed its eighth consecutive year of volume growth and MillerCoors will enter 2013
with a continued focus on multicultural outreach for Coors Light, including sponsorship of
The Mexican Soccer League, Liga MX and the return of “Search for the Coldest” in
partnership with Ice Cube. Building on the success of its packaging innovations, MillerCoors
will launch the new Coors Light “World’s Most Refreshing Can” in the second quarter of
2013. Miller Lite declined mid-single digits for the quarter and low-single digits for the full
year. We will continue to invest in the “It’s Miller Time” campaign and will launch a new
iconic bottle for the on-premise in mid-2013, following the positive volume impact of the
Miller Lite punch top can in 2012. Miller64 STRs were down low-single digits in the quarter
and high-single digits for the full year. Volume trends on the brand have improved
significantly since it’s re-positioning in the first quarter of 2012. MillerCoors Premium Light
STRs declined low-single digits in the fourth quarter and for the full year.
Tenth and Blake Beer Company grew the MillerCoors Craft and Import portfolio by double
digits in the quarter and the full year, driven by Blue Moon Brewing Company and Jacob
Leinenkugel Brewing Company. Due primarily to the superior performance of Summer
Shandy, Leinenkugel’s grew double digits for the year and other offerings, such as Snowdrift
Vanilla Porter were drivers of Leinenkugel’s double-digit growth for the quarter. Blue Moon
grew double digits for the year and high-single digits for the quarter. Peroni Nastro Azzurro
once again delivered strong results, growing mid-single digits in the quarter and high-single
digits for the year.
The MillerCoors Economy portfolio showed improvement for the fourth quarter over the
prior two quarters in 2012, declining mid-single digits for the year and low-single digits for
the quarter. Miller High Life continued its veterans program and will kick off a partnership
with Harley Davidson in mid-2013. Keystone Light continued to drive its “Always Smooth”
positioning primarily through digital engagement and localized marketing efforts. The brand
will launch new packaging in early 2013.
The Premium Regular portfolio showed its best performance since 2008, down low-single
digits for the quarter and down mid-single digits for the year. Miller Genuine Draft’s double
digit decline was partly offset by continued growth of Coors Banquet, the only national
Premium Regular brand in the industry to gain market share in the quarter, versus prior
year. Coors Banquet grew high-single digits for the quarter and mid-single digits for the
year, delivering its sixth straight year of volume growth.
Financial Highlights for the Fourth Quarter and Full Year
Domestic net revenue per barrel grew 3.5 percent for the year and 2.9 percent for the
quarter as a result of strong net pricing and favorable mix.
Total company net revenue per barrel, including contract brewing and company-owned
distributor sales, increased 3.3 percent for the full year and 2.9 percent for the quarter.
Third-party contract brewing volumes were up 5.2 percent for the year and down 0.4
percent for the quarter.
Total COGS per barrel increased 1.6 percent for the quarter, driven by commodity inflation
and packaging innovation, partially offset by strong cost savings.
Marketing, general and administrative costs increased 3.4 percent for the year and 6.4
percent for the quarter, driven primarily by increased marketing media investments in
support of our premium light portfolio.
In the fourth quarter, $25 million of cost savings were achieved, primarily related to
procurement savings and brewery efficiencies.
Depreciation and amortization expenses for MillerCoors in the fourth quarter were $70.3
million, and additions to tangible and intangible assets totaled $178.5 million.
A $15.4 million write-off of Information Systems assets related to the Business
Transformation project was recorded as a special item in the quarter.
Overview of MillerCoors
Built on a foundation of great beer brands and nearly 300 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 the United States, capturing nearly 30
percent of beer sales in the U.S. and Puerto Rico. Led by two of the best-selling beers in the
industry, MillerCoors has a broad portfolio of brands across every major industry segment.
The portfolio is led by the company’s premium light brands: Coors Light, Miller Lite and
Miller64. Coors Light, the World’s Most Refreshing Beer, offers consumers refreshment as
cold as the Rockies. Miller Lite established the American light beer category in 1975,
offering beer drinkers a light beer that tastes like beer should. Miller64 is 64 calories of
crisp, light taste that complements a balanced lifestyle. MillerCoors brews premium beers
Coors Banquet and Miller Genuine Draft, and economy brands Miller High Life and Keystone
Light. Tenth and Blake Beer Company, MillerCoors craft and import division, imports Peroni
Nastro Azzurro, Pilsner Urquell and Grolsch and 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, Wisc., and two microbreweries, the Tenth
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 through great
people changing the way America enjoys beer. MillerCoors builds its brands the right way
through brewing quality, responsible marketing and sustainable environmental and
community impact. 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 plc is one of the world’s leading brewers with more than 200 beer brands and
some 70,000 employees in over 75 countries. The group’s portfolio includes global brands
such as Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft and Grolsch; as well as
leading local brands such as Aguila (Colombia), Castle (South Africa), Miller Lite (USA), Snow
(China), Victoria Bitter (Australia) and Tyskie (Poland). SABMiller also has growing soft
drinks businesses and is one of the world’s largest bottlers of Coca-Cola products.
In the year ended 31 March 2012, the group reported EBITA of US$5,634 million and group
revenue of US$31,388 million. SABMiller plc is listed on the London and Johannesburg stock
exchanges. For more information on SABMiller plc, visit the company's website:
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, Staropramen, 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: 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 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,
2012, 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 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. 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.
Contacts
For further information, please contact:
SABMiller
Tel: +44 20 7659 0100 / 414 931 2000
Richard Farnsworth Media Relations, SABMiller Mob: +44 207 659 0188
Gary Leibowitz Investor Relations, SABMiller Mob: +44 771 742 8540
Molson Coors
Colin Wheeler Media Relations, Molson Coors 303 927 2443
Dave Dunnewald Investor Relations, Molson Coors 303 927 2334
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.
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.
Three Months Ended Twelve Months Ended
Dec 31, Dec 31, Dec 31, Dec 31,
(In millions of $US) 2012 2011 2012 2011
U.S. GAAP: Net Income $170.4 $194.0 $1,190.9 $1,003.8
Attributable to MillerCoors
Plus: Special/Exceptional
Items(1) 15.4 - 31.8 113.4
Tax effect of the
adjustments to arrive at
underlying net income(2) - - - (0.4)
Non-GAAP Underlying Net
Income $185.8 $194.0 $1,222.7 $1,116.8
Plus: Adjustments to IFRS
Underlying EBITA(3) 11.9 39.6 107.3 140.2
IFRS: MillerCoors underlying $197.7 $233.6 $1,330.0 $ 1,257.0
earnings before interest,
taxes and amortization
before exceptional items
(EBITA(4))
Percent change versus prior -15.4% 5.8%
year MillerCoors underlying
EBITA(4)
1. Current year Special/Exceptional items include a pension curtailment gain and the
write-off of assets related to the Home Draft package as well as information systems
assets. Prior year includes a write-down in the value of the Sparks brand, a charge
related to the planned assumption of a multi-employer pension plan and integration
charges related to the MillerCoors Joint Venture.
2. The tax effect of the adjustments to arrive at underlying net income attributable to
MillerCoors, a non-GAAP measure, is calculated based on the estimated tax rate
applicable to the item(s) being adjusted in the period in which they arose.
3. U.S. 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 disposals, share-based compensation, severance
expenses and certain Special Items between U.S. GAAP and IFRS. Amortization of
intangible assets, interest, taxes and non-controlling interest have been removed to
arrive at underlying EBITA.
4. EBITA - Earnings Before Interest, Taxes, and Amortization, excluding exceptional
items.
MILLERCOORS LLC
RESULTS OF OPERATIONS
(VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS $US)
(UNAUDITED)
U.S. GAAP
Three Months Ended Twelve Months Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2012 2011 2012 2011
Volume in Barrels 14,823 15,000 65,020 65,321
Sales $2,058.0 $2,029.7 $8,966.6 $8,763.3
Excise Taxes (274.2) (275.8) (1,205.5) (1,213.1)
Net Sales 1,783.8 1,753.9 7,761.1 7,550.2
Cost of Goods Sold (1,106.8) (1,102.8) (4,689.7) (4,647.9)
Gross Profit 677.0 651.1 3,071.4 2,902.3
Marketing, General and
Administrative Expenses (484.4) (455.1) (1,828.5) (1,768.6)
Special Items, net (15.4) - (31.8) (113.4)
Operating Income 177.2 196.0 1,211.1 1,020.3
Other Income
(Expense), net (3.2) 0.7 0.3 1.2
Income Before Income
Taxes and Non-
controlling Interests 174.0 196.7 1,211.4 1,021.5
Income Taxes (1.7) (1.5) (5.5) (7.5)
Net Income 172.3 195.2 1,205.9 1,014.0
Net Income Attributable
to Non-controlling
Interests (1.9) (1.2) (15.0) (10.2)
Net Income Attributable
to MillerCoors LLC $170.4 $194.0 $1,190.9 $1,003.8
14 February 2013
Sponsor:
J.P. Morgan Equities South Africa Proprietary Limited
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