Wrap Text
MILLERCOORS REPORTS SOLID GROWTH IN UNDERLYING NET INCOME FOR SECOND QUARTER
SABMiller plc
JSEALPHA CODE: SAB
ISIN CODE: SOSAB
ISIN CODE: GB0004835483
MILLERCOORS REPORTS SOLID GROWTH IN UNDERLYING NET INCOME FOR SECOND
QUARTER
Pricing, Brand Mix and Cost Controls Drive Positive Results
August 7, 2012 (London and Denver) – SABMiller plc (SAB.L) and Molson Coors Brewing
Company (NYSE: TAP; TSX: TPX) reported that MillerCoors second quarter underlying net
income increased 9.1 percent to $436.0 million versus prior year, driven by positive pricing,
favorable brand mix and cost management.
“As our major summer marketing programs kicked off during the second quarter, we saw
sequential improvement in retail sales on our premium light brands, highlighted by the
strong growth of Coors Light,” said MillerCoors Chief Executive Tom Long. “We also
delivered double digit growth from Tenth and Blake as we scale brands like Blue Moon and
Leinenkugel’s Summer Shandy to meet changing consumer tastes. Positive brand mix shifts
– combined with our continued attention to cost control and sharp revenue management –
were key to delivering another profitable quarter. We continue to make progress against
our strategy of strengthening our core business, while evolving our portfolio to match
consumer demand.”
Second Quarter 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.
- Underlying net income (a non-GAAP measure) increased 9.1 percent to $436.0
million.
- Total net sales increased 4.3 percent to $2.224 billion.
- Domestic net revenue per barrel, excluding contract brewing and company-owned
distributor sales, increased 3.6 percent.
- Total cost of goods sold (COGS) per barrel increased 2.5 percent.
MillerCoors domestic sales-to-retailers (STRs) were down 1.4 percent, a slight improvement
versus the first quarter trend as the U.S. economic environment remained challenging and
unemployment among our key consumer demographics worsened. Domestic sales-to-
wholesalers (STWs) increased 0.3 percent.
Brand Highlights for the Second Quarter
Premium Light STRs were virtually unchanged in the second quarter versus prior year, an
improvement compared to the first quarter 2012. Coors Light continued to post solid
results, leading all major premium light brands with low-single digit growth for the quarter.
Innovations such as the Coors Light Silver Bullet Aluminum Pint have contributed significant
new volume to the brand. In the early stages of the new “It’s Miller Time” campaign, Miller
Lite declined low-single digits, while showing incremental trend improvement versus the
first quarter. Twelve and 16 oz. can sales have increased in the low-single digits for the
brand, attributable to the launch of the Punch Top Can innovation. Miller64 declined low-
double digits as new branding, packaging and marketing programs rolled out nationally.
Tenth and Blake Beer Company continued to grow the MillerCoors craft and import
portfolio by double digits in the quarter driven primarily by Leinenkugel’s. The Leinenkugel’s
franchise is leading the craft segment in share growth, primarily via double-digit growth of
Leinenkugel’s Summer Shandy. Blue Moon also continued to show strong volume growth.
Peroni Nastro Azzurro grew mid-single digits and continued to show strength.
The Below Premium portfolio declined mid-single digits, as the company maintained
competitive price gaps between Premium and Below Premium brands. Miller High Life
continued to build brand awareness with its “Welcome Veterans Back to the High Life”
program and the unveiling of its new red, white and blue packaging. Keystone Light
continued to drive its “Always Smooth” positioning through digital engagement.
The Premium Regular portfolio was down mid-single digits with a double-digit decline by
Miller Genuine Draft partly offset by mid-single-digit growth of Coors Banquet.
Financial Highlights for the Second Quarter
Domestic net revenue per barrel grew 3.6 percent 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 3.4 percent. Third-party contract brewing volumes were up 6.7
percent.
Total COGS per barrel increased 2.5 percent driven by packaging innovation, brand
premiumization and brewing material costs, partially offset by tight cost control and savings
initiatives.
Marketing, general and administrative costs increased 3.1 percent, driven by slightly
increased marketing spending related to the Miller64 brand re-launch and increased
spending behind new products and packaging innovations, partially offset by lower
information systems costs.
In the second quarter, $32 million of cost savings were achieved versus prior year, primarily
within the integrated supply chain.
Depreciation and amortization expenses for MillerCoors in the second quarter were $73.0
million and additions to tangible and intangible assets totaled $47.6 million.
During the second quarter, special items reflect the benefit of a $2.3 million pension
curtailment gain.
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 Six Months Ended
Jun 30, Jun 30, Jun 30, Jun 30,
(In millions of $US) 2012 2011 2012 2011
$ $ $ $
U.S. GAAP: Net Income 438.3 398.7 713.6 633.4
Attributable to MillerCoors
Plus: Special/Exceptional
Items (1) (2.3) 1.1 (2.3) 2.5
Tax effect of the
adjustments to arrive at
underlying net income (2) - - - -
Non-GAAP Underlying Net $ $ $ $
Income 436.0 399.8 711.3 635.9
Plus: Adjustments to IFRS
Underlying EBITA (3) 41.7 39.3 79.6 71.5
IFRS: MillerCoors $ $ $ $
underlying earnings before 477.7 439.1 790.9 707.4
interest, taxes and
amortization before
exceptional items
(EBITA(4))
Percent change versus 8.8% 11.8%
prior year MillerCoors
underlying EBITA (4)
1 Current year, Special, or Exceptional items includes a pension curtailment gain. Prior
year includes 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 disposal, share-based compensation and severance
expenses 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 Six Months Ended
Jun 30, Jun 30, Jun 30, Jun 30,
2012 2011 2012 2011
Volume in Barrels 18,490 18,325 33,282 33,154
$ $ $ $
Sales 2,567.2 2,473.1 4,601.8 4,448.4
Excise Taxes (343.2) (340.8) (618.0) (617.0)
Net Sales 2,224.0 2,132.3 3,983.8 3,831.4
Cost of Goods Sold (1,311.8) (1,268.8) (2,381.8) (2,331.8)
Gross Profit 912.2 863.5 1,602.0 1,499.6
Marketing, General and
Administrative Expenses (470.1) (456.0) (880.9) (852.0)
Special Items, net 2.3 (1.1) 2.3 (2.5)
Operating Income 444.4 406.4 723.4 645.1
Other Income
(Expense), net 1.1 (1.5) 2.4 (1.9)
Income Before Income
Taxes and Non-
controlling Interests 445.5 404.9 725.8 643.2
Income Taxes (1.8) (2.9) (2.5) (4.4)
Net Income 443.7 402.0 723.3 638.8
Net Income Attributable
to Non-controlling
Interests (5.4) (3.3) (9.7) (5.4)
Net Income Attributable $ $ $ $
to MillerCoors LLC 438.3 398.7 713.6 633.4
07 August 2012
Sponsor:
J.P. Morgan Equities Limited
Date: 07/08/2012 01:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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