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SAB - SABMiller Plc - Millercoors posts strong profit growth in 2010
SABMiller Plc
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
MILLERCOORS POSTS STRONG PROFIT GROWTH IN 2010
Despite Soft Volumes, Fourth Quarter Premium Light Sales Trends Improved
Brewer Surpasses $500 Million in Annualized Synergy Savings Six Months Ahead
of Schedule
February 10, 2011 (London and Denver) -SABMiller plc (SAB.L) and Molson Coors
Brewing Company (NYSE: TAP; TSX) reported that MillerCoors underlying net
income increased at double-digit rates in the fourth quarter and full year
ended December 31, 2010, despite one of the most challenging years on record
for the U.S. beer industry.
MillerCoors fourth quarter underlying net income, excluding special items,
increased 38.0 percent to $146 million compared with the prior year period,
while full year underlying net income increased 21.9 percent to $1.087
billion behind positive pricing, favorable brand mix, and continued strong
cost management. While industry volumes remained soft in the quarter,
MillerCoors` Premium Light portfolio saw continued trend improvements.
"We continue to invest in innovation behind our premium light brands, drive
growth in our craft and import portfolio and deliver synergy and cost savings
as promised," said Leo Kiely, chief executive officer, MillerCoors. "Our
consistent focus generated positive net revenue per barrel growth for the
fourth quarter. We are building brand equity and improving our mix to meet
the challenges ahead in 2011."
Key operating results for the fourth quarter are compared to the prior year
comparable quarter and include MillerCoors operations in the U.S. and Puerto
Rico.
FOURTH QUARTER AND FULL YEAR HIGHLIGHTS
(Unless otherwise indicated, all amounts are in U.S. dollars and calculated
in accordance with U.S. GAAP, and all percentages are versus the prior-year
comparable period.)
- Fourth quarter underlying net income, excluding special items, increased
38.0% to $146 million, while full-year underlying net income, excluding
special items, grew 21.9% to $1.087 billion
- Fourth quarter total net sales increased 0.4% to $1.720 billion, while
full-year total net sales were unchanged;
- revenue per barrel (NRPB), excluding contract brewing and company-owned
distributor sales, increased 1.7 percent, driven by pricing growth and
favorable mix. For the full year, domestic NRPB increased 2.3 percent.
- Fourth quarter total cost of goods sold (COGS) per barrel increased
1.8%, while domestic COGS per barrel were flat. Full-year total COGS
per barrel increased 2.1%.
- MillerCoors surpassed its three-year synergies goal six months ahead of
schedule delivering $60 million of synergy savings in the fourth
quarter, for a total of $505 million in cumulative synergy savings
realized since July 1, 2008. Additional cost savings of $31 million were
achieved in the fourth quarter, bringing total synergy and cost savings
to $655 million since July 1, 2008.
For the quarter, MillerCoors domestic sales-to-retailers (STRs) declined 2.5
percent, about half the decline in the third quarter due to trend
improvements in premium light sales. For the full year, STRs were down 3.2
percent.
Domestic sales-to-wholesalers (STWs) declined 2.2 percent in the quarter
driven by STR declines. Full-year STWs were down 3.0 percent.
Fourth Quarter Brand STR Highlights
Premium Light STRs were down slightly in the fourth quarter, as Coors Light
was up low-single digits due to strong distribution gains in the quarter; and
Miller Lite trends continued to stabilize since the launch of the Miller Lite
Vortex bottle and expanded distribution of the Miller Lite Aluminum Pint.
MGD 64 declined at a double-digit rate.
MillerCoors Craft and Import portfolio managed by Tenth and Blake Beer
Company grew double digits in the quarter, driven by the strong performance
of Blue Moon, the biggest-selling craft beer brand in the country. The
smaller Domestic Above-Premium portfolio continued to experience double-digit
declines.
The Below Premium portfolio was down mid-single digits due to declines in
Miller High Life and Milwaukee`s Best. Keystone Light was down low-single
digits.
Fourth Quarter Financial Highlights
MillerCoors total net sales increased 0.4 percent to $1.720 billion versus
fourth quarter 2009. Full-year total net sales were $7.571 billion,
virtually unchanged from prior year. Third party contract brewing volumes
were down 3.7 percent for the quarter. Full-year contract brewing was down
0.7 percent.
Fourth quarter COGS per barrel increased 1.8 percent versus the prior year.
The increase was primarily due to Coors Distributing Company`s acquisition of
Western Beverage in Denver. Domestic COGS per barrel were flat for the
quarter despite higher fuel costs and unfavorable mix, which were offset by
synergy and cost saving programs. Full-year COGS per barrel increased 2.1
percent.
Marketing, general and administrative costs decreased 5.4 percent to $472.5
million in the fourth quarter, primarily due to synergy savings and lower
promotional and tactical spending.
Depreciation and amortization expenses for MillerCoors in the fourth quarter
were $70.6 million and additions to tangible and intangible assets totaled
$124.0 million.
During the fourth quarter, special items were $2.2 million primarily related
to integration charges.
Integration, Synergies and Cost Savings
In the fourth quarter, synergy savings of $60 million were realized, driven
by non-organizational synergies of $58 million. The non-organizational
savings were primarily realized from media, regional tactical spending,
inbound and outbound freight, packaging and brewing materials and point-of-
sale materials.
To date, MillerCoors cumulative synergies have grown to $505 million,
surpassing the original commitment to deliver $500 million by June 30, 2011.
In addition to synergies, an additional $31 million of cost savings were
realized in the quarter driven by various cost savings initiatives led by the
integrated supply chain, marketing and sales divisions. Cumulative cost
savings to date total $150 million.
In total, MillerCoors has delivered $655 million in cumulative synergies and
cost savings since July 1, 2008, and is on track to deliver $750 million of
total synergies and cost savings by the end of 2012.
###
Overview of MillerCoors
MillerCoors brews, markets and sells the MillerCoors portfolio of brands in
the U.S. and Puerto Rico. 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 America, capturing nearly 30 percent of U.S. beer
sales. Led by two of the best-selling beers in the industry, MillerCoors has
a broad portfolio of highly complementary brands across every major industry
segment. Miller Lite is the great-tasting beer that established the American
light beer category in 1975, and Coors Light is the brand that introduced
consumers to Rocky Mountain cold refreshment. MillerCoors brews premium
beers Coors Banquet and Miller Genuine Draft, and economy brands Miller High
Life and Keystone Light. The company also offers innovative products such as
MGD 64, Miller Chill and Sparks. Through its new craft and import company,
Tenth and Blake, imports Peroni Nastro Azzurro, Pilsner Urquell, Grolsch and
Molson Canadian 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, Wisconsin, and two
microbreweries, the 10th 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 by driving profitable industry growth.
MillerCoors insists on building its brands the right way through brewing
quality, responsible marketing and environmental and community impact.
MillerCoors is a joint venture of SABMiller plc and Molson Coors Brewing
Company.
Overview of SABMiller
SABMiller plc is one of the world`s largest brewers with brewing interests
and distribution agreements across six continents. The group`s wide portfolio
of brands includes premium international beers such as Pilsner Urquell,
Peroni Nastro Azzurro, Miller Genuine Draft and Grolsch, as well as leading
local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. SABMiller
plc is also one of the world`s largest bottlers of Coca-Cola products. In the
year ended March 31, 2010, the group reported $3,803 million adjusted pre-tax
profit and group revenue of $26,350 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, 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 review. 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, 2010, 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
Nigel Fairbrass Media Relations, SABMiller Mob: +44 7799 894265
Gary Leibowitz Investor Relations, SABMiller Mob:
+44 20 7659 0105
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 US 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.
Dollars in Millions MillerCoors LLC
Three Months Ended Twelve Months Ended
December December December
December
31, 2010 31, 2009 31, 2010 31, 2009
US -GAAP : Net Income,
attributable to
MillerCoors 144.2 102.2 1,057.0 842.8
Plus: Special
(Exceptional) items2.2 3.9 30.3 49.4
Non - GAAP
Underlying
Net Income 146.4 106.1 1,087.3 892.2
Plus: Adjustments to
IFRS Underlying
EBITASquared 37.3 35.2 141.0 141.7
IFRS : MillerCoors
underlying earnings
before interest,
Interest Taxes and
amortization before
exceptional items
(EBITACubed) 183.7 141.3 1,228.3 1,033.9
Percent change vs.
prior year MillerCoors
underlying EBITA Cubed 30.0% 18.8%
Special, or Exceptional items include one-time integration charges and other
pension charges related to the MillerCoors Joint Venture
Squared US - 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,
share based compensation and severance
expenses between US - GAAP and IFRS. Amortization of intangible assets,
Interest, Taxes, Equity Income and Minority
interest have been removed to arrive at underlying EBITA.
Cubed EBITA - Earnings Before Interest, Taxes, and Amortization, excluding
exceptional items.
MILLERCOORS LLC
RESULTS OF OPERATIONS
(VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS)
(UNAUDITED)
US GAAP Three Months Ended Twelve Months Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2010 2009 2010 2009
Volume in barrels 15,051 15,411 67,175 69,098
Sales $1,997.9 $1,995.8 $8,817.7 $8,851.6
Excise Taxes (278.2) (283.6) (1,277.3)
(1,247.1)
Net Sales 1,719.7 1,712.2 7,570.6 7,574.3
Cost of Goods Sold (1,096.2) (1,102.1) (4,686.3) (4,720.9)
Gross Profit 623.5 610.1 2,884.3 2,853.4
Marketing, General and
Administrative Expenses (472.5) (499.5) (1,775.1) (1,937.9)
Special Items, net (2.2) (3.9) (30.3) (49.4)
Operating Income 148.8 106.7 1,078.9 866.1
Other Income (Expense), (1.1) (0.7) 2.4 0.9
net
Income Before Income
Taxes and Non- 147.7 106.0 1,081.3 867.0
controlling Interests
Income Tax Expense (1.7) (1.5) (7.6) (8.4)
Net Income 146.0 104.5 1,073.7 858.6
Net Income Attributable
to Non-controlling (1.8) (2.3) (16.7) (15.8)
Interests
Net Income Attributable
to MillerCoors LLC $144.2 $102.2 $1,057.0 $842.8
Date: 10/02/2011 14:02:31 Supplied by www.sharenet.co.za
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