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SABMILLER PLC - MillerCoors delivers 2.9% underlying net income growth for 2014

Release Date: 10/02/2015 14:00
Code(s): SAB     PDF:  
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MillerCoors delivers 2.9% underlying net income growth for 2014

SABMiller plc
JSEALPHA CODE: SAB
ISIN CODE: SOSAB
ISIN CODE: GB0004835483

MILLERCOORS DELIVERS 2.9% UNDERLYING NET INCOME GROWTH FOR 2014
Fourth Quarter Underlying Net Income Decreased 11.8%
Miller Lite Returns to Growth in Fourth Quarter for the First Time Since 2007


February 10, 2015 (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
2.9 percent for the full year 2014 to $1.328 billion, while fourth quarter underlying net income decreased
11.8 percent to $213.3 million versus the same period in the prior year due to lower shipment volume,
unrealized losses on commodity hedges and higher marketing investment. Fourth quarter sales to retailer
volume continued to improve, with Miller Lite returning to growth. Increased profitability for the year was
driven by positive pricing, sales mix and cost savings.


“In 2014, we made progress in growing our net revenue per barrel and transforming our portfolio to higher
revenue brands while also restoring growth to Miller Lite,” said Tom Long, MillerCoors Chief Executive
Officer. “Last year we also continued to grow the Above Premium segment with higher-margin offerings,
notably Redd’s, Blue Moon and Leinenkugel’s Summer Shandy.”


Full Year and Fourth Quarter Highlights
Unless otherwise indicated, all amounts are in U.S. dollars and calculated in accordance with accounting
principles generally accepted 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, grew 2.9 percent to $1.328 billion for the year and
        decreased 11.8 percent to $213.3 million for the fourth quarter.
    o   Total net sales increased 0.6 percent to $7.848 billion for the year and declined 1.1 percent to
        $1.782 billion for the quarter.
    o   Domestic net revenue per barrel, excluding contract brewing and company-owned distributor
        sales, increased 2.9 percent for the year and 2.0 percent for the quarter.
    o   Total cost of goods sold (COGS) per barrel increased 2.6 percent for the year and 3.0 percent for
        the fourth quarter.
    o   Domestic sales-to-retail volume (STRs) decreased 2.5 percent for the year and 1.7 percent for the
        quarter.
    o   Domestic sales-to-wholesalers volume (STWs) decreased 2.5 percent for the year and 3.7 percent
        for the quarter.

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Brand Highlights for the Full Year and Fourth Quarter
The MillerCoors Premium Light portfolio STRs declined low-single digits for the full year and the fourth
quarter.


Miller Lite declined low-single digits for the full year but grew low-single digits in the fourth quarter. The
brand’s growth is attributed to its graphic design overhaul, which began a year ago and was inspired by
the Original Lite Can; this re-design has now been extended to all of the brand’s consumer touch points. In
March, the brand will once again sponsor the South by Southwest Conference, and this spring, Miller Lite
will release new television advertising continuing to emphasize the brand’s quality and authenticity.


In 2014, Coors Light declined low-single digits for the full year and in the fourth quarter. In 2015, Coors
Light will benefit from a significant brand restage that will provide beer drinkers with a deeper
understanding of why “Rocky Mountain cold refreshment” matters and how it sets Coors Light apart from
competitors. The restage will include a new visual identity, new packaging design and new television
advertising that will air in the spring.


Total Above Premium portfolio STRs grew high-single digits in 2014 and low-single digits in the fourth
quarter, led by Redd’s, Smith & Forge, Miller Fortune and craft brands like Blue Moon Belgian White and
Leinenkugel’s Seasonal Shandy variants. The Redd’s Franchise was the fastest growing flavored malt
beverage (FMB) in the category in 2014, growing double-digits in the year and high-single digits in the
fourth quarter. The brand franchise was aided by the introduction of Redd’s Wicked Apple in the third
quarter, which was already the number one FMB growth brand in the grocery channel and the number two
FMB growth brand in the convenience store channel in the fourth quarter. Both Smith & Forge and Miller
Fortune captured modest share of the Above Premium segment in both the year and the quarter. Though it
was introduced less than a year ago, Smith & Forge is already number three in the cider segment by
volume for the full year, according to Nielsen.


Blue Moon Belgian White grew low-single digits for the year and in the fourth quarter. Blue Moon will
celebrate its twentieth anniversary in 2015. Though sales of Blue Moon’s winter seasonal, Mountain Abbey
Ale, did not meet expectations, the spring seasonal, First Peach Ale, debuted on January 1 and has
already outpaced last year’s spring release. Leinenkugel’s decreased low-single digits in the quarter, but
grew mid-single digits for the year. Seasonal Shandy performance grew year over year in the fourth
quarter with the successful introduction of Cranberry Ginger Shandy; this was partially offset by the soft
performance of Leinenkugel’s Heritage portfolio.


The MillerCoors Premium Regular portfolio STRs decreased mid-single digits for both the year and the
fourth quarter.



                                                                                                                 2
Coors Banquet grew low-single digits for the full year and the fourth quarter. 2014 marks the eighth
consecutive year the brand has grown in a declining segment, and it was the only national Premium
Regular beer that grew in 2014, according to Nielsen. This year, the brand’s “stubby” heritage bottle will be
expanded into 12-packs, 18-packs and 20-packs nationwide.


Below Premium portfolio STRs decreased mid-single digits for both the year and the quarter.


Miller High Life declined mid-single digits for the year and low-single digits in the fourth quarter. The brand
saw sequential trend improvement in each quarter of 2014 and realized a mid-single digit trend swing in
2014 over the prior year; this is attributed, in large part, to the brand’s “I Am Rich,” advertising campaign.
Steel Reserve grew mid-single digits for the year and in the fourth quarter due to the success of the Steel
Reserve Alloy Series, the brand’s line of FMBs.


Financial Highlights for the Full Year and Fourth Quarter
Domestic net revenue per barrel grew 2.9 percent for the year and 2.0 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 2.8 percent for the full year and 2.0 percent for the quarter. Third-party contract brewing
volumes were up 0.8 percent for the year and up 1.9 percent for the quarter.


Total COGS per barrel increased 2.6 percent for the full year and 3.0 percent for the quarter, driven by
commodity and brewery inflation, lower fixed-cost absorption, higher costs associated with brand
innovation and, in the fourth quarter, unrealized losses on commodity hedges.


Marketing, general and administrative costs decreased by 0.8 percent for the full year and were up 1.8
percent for the quarter. The fourth quarter increase was driven by higher media investment, partially offset
by lower employee benefit related expenses. Lower employee benefit related expenses drove the full year
reduction.


MillerCoors achieved $143 million of cost savings for the year and $30 million in the fourth quarter,
primarily related to procurement savings, lower employee-related expenses and logistics and brewery
efficiencies.


Depreciation and amortization expenses for MillerCoors were $311.1 million for the year and $78.0 million
in the fourth quarter. Additions to tangible and intangible assets totaled $401.1 million in the year and
$138.9 million in the quarter.




                                                                                                                 3
Full year special items of $1.4 million related to restructuring costs. There were no special items in the
quarter.
                                                     ###



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 (restated).

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
Banquet, Coors Light, Molson Canadian and Staropramen. Molson Coors is listed on the 2014/2015 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



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                  Twelve Months Ended



                                                                                                          5
                                           Dec 31,           Dec 31,              Dec 31,           Dec 31,
(In millions of $US)                        2014              2013                 2014              2013

U.S. GAAP: Net Income                     $     213.3       $     237.1        $    1,326.2     $     1,270.5
Attributable to MillerCoors
Plus: Special/Exceptional Items¹                     -               4.8                  1.4            19.8

Non-GAAP Underlying Net
Income                                    $     213.3       $     241.9       $     1,327.6     $     1,290.3
Adjustments to IFRS Underlying
                2
EBITA-Reported                                   25.4             (11.5)               94.2              52.4


Restatement Adjustments to IFRS
                            3
Underlying EBITA – Restated                          -               2.2                    -            (5.8)

IFRS: MillerCoors underlying              $     238.7       $     232.6       $     1,421.8     $     1,336.9
earnings before interest, taxes and
amortization before exceptional
             4
items (EBITA )

Percent change versus prior year                 2.6%                                 6.4%
MillerCoors underlying EBITA
         4
Restated
1
 Current year Special/Exceptional items include restructuring related costs. Prior year
includes restructuring related costs and the write-off of information systems assets.
2
  U.S. GAAP Underlying net income to IFRS EBITA adjustments relate to differing
treatment of step-up depreciation, pension and 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 standards have 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.




                                 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,
                                    2014           2013                 2014           2013


                                                                                                          6
 Total STW volume in
 barrels                            14,111          14,555           61,954          63,294

 Sales                        $    2,039.1    $    2,068.1     $    8,990.4    $    8,969.8

 Excise taxes                      (257.3)         (265.6)         (1,142.0)       (1,169.0)

 Net sales                         1,781.8         1,802.5          7,848.4         7,800.8

 Cost of goods sold               (1,129.6)       (1,130.9)        (4,743.8)       (4,723.7)

 Gross profit                        652.2           671.6          3,104.6         3,077.1

 Marketing, general and
 administrative expenses           (434.1)         (426.3)         (1,755.9)       (1,769.9)

 Special items, net                       -            (4.8)           (1.4)          (19.8)

 Operating income                    218.1           240.5          1,347.3         1,287.4

 Interest income (expense),
 net                                  (0.1)            (0.2)           (1.1)           (1.6)

 Other income (expense),
 net                                   1.2              0.4             5.5             2.0

 Income before income
 taxes and non-controlling
 interests                           219.2           240.7          1,351.7         1,287.8

 Income taxes                         (1.5)            (0.8)           (6.1)           (3.9)

  Net income                         217.7           239.9          1,345.6         1,283.9

 Net income attributable to
 non-controlling interests            (4.4)            (2.8)          (19.4)          (13.4)

 Net income attributable
 to MillerCoors LLC           $      213.3    $      237.1     $    1,326.2    $    1,270.5




Sponsor: J.P. Morgan Equities South Africa (Pty) Ltd




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