Wrap Text
MillerCoors delivers 8.0% underlying net income growth in second quarter
SABMiller plc
JSEALPHA CODE: SAB
ISIN CODE: SOSAB
ISIN CODE: GB0004835483
SABMiller plc (the “Company”)
MILLERCOORS DELIVERS 8.0% UNDERLYING NET INCOME GROWTH IN SECOND QUARTER
Total Net Sales Increased 2.2 Percent in the Second Quarter to $2.207 Billion
August 6, 2014 (London and Denver) – SABMiller plc (LN:SAB; OTC:SABMRY) and Molson Coors
Brewing Company (NYSE: TAP; TSX: TPX) reported that MillerCoors second quarter underlying net
income grew 8.0 percent to $445.7 million versus the same period in the prior year, driven by positive
pricing, sales mix and cost savings. Total net sales increased 2.2 percent in the second quarter to $2.207
billion.
“In the second quarter, we continued to gain share with our Above Premium portfolio, driving profitable
growth with brands like Redd’s, Leinenkugel’s Summer Shandy, Smith & Forge Hard Cider and Miller
Fortune,” said MillerCoors Chief Executive Officer Tom Long. “We also continued to engage consumers
around our flagship beers with big ideas like Miller Lite’s Original Can and Coors Light Summer Brew.”
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 percentages are versus the prior year
comparable period and include MillerCoors operations in the U.S. and Puerto Rico.
o Underlying net income, a non-GAAP measure, increased 8.0 percent to $445.7 million for the
second quarter.
o Total net sales increased 2.2 percent to $2.207 billion.
o Domestic net revenue per barrel, excluding contract brewing and company-owned distributor
sales, increased 3.6 percent.
o Total cost of goods sold (COGS) per barrel increased 1.9 percent.
o Domestic sales-to-retailers (STRs) decreased 1.2 percent.
o Domestic sales-to-wholesalers (STWs) decreased 1.7 percent.
Brand Highlights for the Second Quarter
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Premium Light portfolio STRs declined low-single digits, with both Coors Light and Miller Lite down low-
single digits for the quarter.
On May 1, Coors Light introduced its first U.S. line extension, Coors Light Summer Brew. Since its debut,
Summer Brew has captured 0.5 share points of the Premium Light segment. Summer Brew will continue
national advertising through the summer, and Coors Light will debut new television advertising this
September.
Miller Lite can STR’s were up mid-single digits in the second quarter. Based on the success of the Original
Lite Can, which debuted earlier this year, the brand released its Heritage bottles on August 1, featuring a
similar Original Lite design that speaks to the brand’s authenticity. An updated design inspired by Miller
Lite’s original look will be released across all packaging in October.
Total Above Premium portfolio STRs grew double digits in the second quarter. Innovations delivered
strong volume and value growth in Above Premium, driven primarily by the Redd’s franchise and
Leinenkugel’s franchise, with support from Miller Fortune and Smith & Forge Hard Cider. The Redd’s
franchise continues to post strong results with volume more than doubling in the second quarter versus the
prior year comparable period. To capitalize on that momentum, Redd’s launched a higher-ABV apple ale,
Redd’s Wicked Apple, earlier this week. Miller Fortune captured 0.2 share points of the total industry in the
second quarter and is the fourth largest growth brand in the category, according to Nielsen. Smith & Forge
Hard Cider, launched in March, gained the most value and volume share within the cider segment in the
quarter, according to Nielsen.
Within the Above Premium portfolio, Tenth and Blake Beer Company’s performance improved over the first
quarter, yet still declined low-single digits in the second quarter. High-single digit growth of the
Leinenkugel’s franchise and low-single digit growth of Blue Moon Belgian White partially offset double digit
declines in Henry Weinhard’s, which was strategically de-prioritized and has returned to being a regional
brand. Leinenkugel’s Summer Shandy continues its success in 2014, growing double digits in the quarter.
In addition to Orange Shandy, this September, Leinenkugel’s will introduce its Fall Shandy Variety Pack,
featuring three new shandies: Harvest Patch Shandy, Old Fashioned Shandy and Cranberry Ginger
Shandy.
The Premium Regular portfolio was down low-single digits in the second quarter, driven by double digit
declines in Miller Genuine Draft. This was partially offset by high-single digit growth of Coors Banquet,
which has now grown for more than seven consecutive years. This year, the brand launched one of the
biggest media plans in its history, and Coors Banquet television advertising will air nationally throughout
the year.
Miller High Life declined mid-single digits in the second quarter, and Keystone Light declined high-single
digits.
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In April 2014, Miller High Life and Keystone Light returned to television with national advertising campaigns
for the first time since 2012. Miller High Life mitigated its decline by achieving a mid-single digit trend
improvement versus the first quarter, attributed to its national advertising campaign.
Financial Highlights for the Second Quarter
Domestic net revenue per barrel grew 3.6 percent for the quarter as a result of favorable net pricing and
positive brand mix.
Total company net revenue per barrel, including contract brewing and company-owned distributor sales,
increased 3.1 percent. Contract brewing volumes were up 6.4 percent.
Total COGS per barrel increased 1.9 percent, driven primarily by brand mix, as cost savings offset
inflation.
Marketing, general and administrative costs increased by 0.6 percent. The increase was driven by higher
media investment and higher employee related expenses.
MillerCoors achieved $40 million of cost savings in the second quarter, primarily related to procurement
savings, brewery efficiencies and lower overhead costs.
Depreciation and amortization expenses for MillerCoors in the second quarter were $77.4 million, and
additions to tangible and intangible assets totaled $70.0 million.
Special items in the quarter included restructuring costs of $0.5 million.
###
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Overview of MillerCoors
Through its diverse collection of storied breweries, MillerCoors brings American beer drinkers an
unmatched selection of the highest quality beers 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, as well as innovative new products such as Miller Fortune. 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. Tenth and Blake also operates Crispin Cidery, an artisanal maker
of pear and apple ciders using 100 percent fresh-pressed American juice. The company imports world-
renowned beers such as Italy’s Peroni, the Czech Republic’s Pilsner Urquell, Canada’s Molson Canadian
and the Netherlands’ Grolsch. MillerCoors also offers pioneering new brands such as Redd’s Apple Ale,
Batch 19 Pre-Prohibition Lager, Third Shift Amber Ale and Smith & Forge Hard Cider. MillerCoors seeks
to become America’s best beer company through an uncompromising promise of 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 plc is in the beer and soft drinks business. We are the world's second largest brewing company
and are one of the world's largest bottlers of Coca-Cola drinks. We also produce a portfolio of wholly-
owned soft drinks brands. We are a FTSE-20 company, with shares trading on the London Stock
Exchange, and we have a secondary listing on the Johannesburg stock exchange. We operate in more
than 80 countries with around 70,000 employees. The group's brand portfolio includes leading local
brands such as Aguila (Colombia), Castle (South Africa), Miller Lite (USA), Snow (China), Victoria Bitter
(Australia) and Tyskie (Poland) as well as global brands such as Pilsner Urquell, Peroni Nastro Azzurro,
Miller Genuine Draft and Grolsch. Every minute of every day, more than 140,000 bottles of SABMiller beer
are sold.
In the year ended 31 March 2014, the group sold 318 million hectoliters of lager, soft drinks and other
alcoholic beverages, generating group net producer revenue of US$26,719 million and EBITA of US$6,453
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 one of the world’s largest brewers. The Company’s operating
segments include Canada, the United States, Europe, and Molson Coors International (MCI). The
Company has a diverse portfolio of owned and partner brands, including signature brands Carling, Coors
Light, Molson Canadian and Staropramen. Molson Coors is listed as the beverage industry sector leader
on the 2013/2014 Dow Jones Sustainability World Index (W1SGITRD), the most recognized global
benchmark of sustainability among global corporations. For more information on Molson Coors Brewing
Company, visit the company’s website, www.molsoncoors.com.
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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, 2014, 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.
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
Sponsor: J.P. Morgan Equities South Africa (Pty) Ltd
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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.
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
(In millions of $US) 2014 2013 2014 2013
U.S. GAAP: Net Income $ 445.2 $ 412.7 $ 736.4 $ 684.6
Attributable to MillerCoors
Plus: Special/Exceptional Items¹ 0.5 - 1.2 -
Non-GAAP Underlying Net
Income $ 445.7 $ 412.7 $ 737.6 $ 684.6
Adjustments to IFRS Underlying
2
EBITA-Reported 24.8 2.8 48.8 30.8
Restatement Adjustments to IFRS
3
Underlying EBITA – Restated - 3.4 - (11.7)
IFRS: MillerCoors underlying $ 470.5 $ 418.9 $ 786.4 $ 703.7
earnings before interest, taxes and
amortization before exceptional
4
items (EBITA )
Percent change versus prior year 12.3% 11.8%
MillerCoors underlying EBITA
4
Restated
1
Current year Special/Exceptional items include restructuring related costs.
2
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, 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.
3
With effect from April 1, 2014 and April 1, 2013, SABMiller adopted IFRS 10,
“Consolidated Financial Statements,” and the amended IAS 19, “Employee Benefits,”
respectively. The accounting standard has been applied retrospectively and results
included in SABMiller’s fiscal years ended March 31, 2014 and March 31, 2013 have been
restated accordingly.
4
EBITA-Earnings Before Interest, Taxes, and Amortization, excluding exceptional items.
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MILLERCOORS LLC
RESULTS OF OPERATIONS
(VOLUMES IN THOUSANDS, DOLLARS IN MILLIONS $US)
(UNAUDITED)
U.S. GAAP
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2014 2013 2014 2013
Total STW volume in
barrels 17,322 17,480 31,373 31,994
Sales $ 2,526.9 $ 2,484.4 $ 4,577.0 $ 4,541.1
Excise taxes (320.2) (325.4) (579.9) (593.8)
Net sales 2,206.7 2,159.0 3,997.1 3,947.3
Cost of goods sold (1,282.4) (1,270.1) (2,376.5) (2,358.8)
Gross profit 924.3 888.9 1,620.6 1,588.5
Marketing, general and
administrative expenses (474.0) (471.0) (872.1) (896.1)
Special Items, net (0.5) - (1.2) -
Operating Income 449.8 417.9 747.3 692.4
Interest income (expense),
net (0.3) (0.4) (0.6) (0.9)
Other income (expense),
net 2.9 0.5 3.2 1.3
Income before income
taxes and non-controlling
interests 452.4 418.0 749.9 692.8
Income taxes (1.4) (1.3) (3.3) (1.7)
Net income 451.0 416.7 746.6 691.1
Net income attributable to
non-controlling interests (5.8) (4.0) (10.2) (6.5)
Net income attributable
to MillerCoors LLC $ 445.2 $ 412.7 $ 736.4 $ 684.6
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