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SABMILLER PLC - MillerCoors reports 2015 underlying net income of $1.328 Billion, in-line with prior year

Release Date: 11/02/2016 14:00
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MillerCoors reports 2015 underlying net income of $1.328 Billion, in-line with prior year

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


MILLERCOORS REPORTS 2015 UNDERLYING NET INCOME OF $1.328 BILLION, IN-LINE WITH
PRIOR YEAR


Fourth Quarter Underlying Net Income Decreased 10.2%; Coors Light and Miller Lite Gain Market
Share of the Premium Light Segment for Quarter and Year


February 11, 2016 (London and Denver) – SABMiller plc (LN:SAB; OTC:SABMRY) and Molson Coors
Brewing Company (NYSE: TAP; TSX: TPX) reported that MillerCoors underlying net income for the full
year was $1.328 billion, which was in-line with 2014. Fourth quarter underlying net income decreased 10.2
percent to $191.5 million versus the same period in the prior year, driven by lower volume and increased
marketing and information technology investment, partially offset by lower cost of goods sold, net pricing
growth and positive sales mix. For the third consecutive quarter, Coors Light and Miller Lite each gained
share of the Premium Light segment. Domestic net revenue per barrel increased 1.5% for both the quarter
and year.


“We began to drive substantial improvements to our business in the latter half of 2015 that were necessary
to create the foundation for growth we aim to achieve in the years ahead,” said Gavin Hattersley,
MillerCoors Chief Executive Officer. “Additionally, there were a number of positives in the fourth quarter as
our net revenue per barrel again increased, and we invested significantly more in our brands, which
resulted in our flagship brands taking further share in the Premium Light segment, while a number of our
Above Premium brands also continued their growth.”


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 market share references are per A.C. Nielsen.
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, was $1.328 billion for the full year, in-line versus
        prior year, and decreased 10.2 percent to $191.5 million for the fourth quarter.
    o   Total net sales decreased 1.6 percent to $7.726 billion for the year and declined 1.9 percent to
        $1.748 billion for the quarter.
    o   Domestic net revenue per barrel, excluding contract brewing and company-owned distributor
        sales, increased 1.5 percent for both the year and the quarter.
    o      Total cost of goods sold (COGS) per barrel decreased 1.3 percent for the year and 3.4 percent for
           the quarter.
    o      Domestic sales-to-retail volume (STRs) decreased 2.6 percent for the year and 2.2 percent for the
           quarter, primarily driven by lower volume in the Below Premium segment.
    o      Domestic sales-to-wholesalers volume (STWs) decreased 2.9 percent for the year and 3.1 percent
           for the fourth quarter.


Brand Highlights for the Full Year and Fourth Quarter
Miller Lite gained share of the Premium Light segment in the fourth quarter and the year, but STRs
decreased low-single digits during the fourth quarter and year. The brand’s strong performance in the
segment can be partially attributed to the recent limited-edition release of the Steinie bottle, which was the
latest step in celebrating Miller Lite’s unique heritage and history. Miller Lite will continue to emphasize its
authenticity and originality through brand messaging.


Coors Light gained share of the Premium Light segment in the year and the fourth quarter, having its best
quarterly volume performance since the second quarter of 2014, but STRs declined low-single digits for
the quarter and year. Coors Light began to reassert its pride in the quality of the beer and its heritage
through a new marketing campaign which launched in January. Known as “Climb On”, the campaign
makes a stronger emotional connection with beer drinkers who know that climbing our personal mountains
is what makes life enjoyable.


Overall, MillerCoors Premium Light portfolio STRs declined low-single digits for the full year and the fourth
quarter.


The MillerCoors Above Premium STRs finished up low-single digits for the year, excluding Miller Fortune,
which was strategically deprioritized. The Redd’s franchise achieved mid-single-digit growth in the quarter
and double-digit growth for the year, driven by Redd’s Green Apple and Redd’s Wicked brands, including
the 2015 introduction of Redd’s Wicked Mango. Including Miller Fortune, the portfolio was down low-single
digits in the fourth quarter and year.


The MillerCoors Tenth & Blake portfolio finished the year with low-single digit growth, but declined low-
single digits for the quarter. The Blue Moon Brewing Company grew low-single digits for both the quarter
                                                     st
and year, driven by Blue Moon Belgian White’s 81 consecutive quarter of growth and the release of Blue
Moon White IPA, which finished 2015 as the No. 3 new craft offering of the year, according to Nielsen. The
Jacob Leinenkugel Brewing Company declined double digits in the quarter, primarily caused by a
temporary production issue with the winter variety pack that has been resolved. Despite that,
Leinenkugel’s was up low-single digits for the year due to the continued growth of its Shandy portfolio and
its new varietals, Harvest Patch Shandy and Grapefruit Shandy. According to Nielsen, Grapefruit Shandy
was the No. 1 new craft offering in 2015. Since acquiring the Saint Archer Brewing Company in October,
MillerCoors has moved quickly to align our distribution footprint in California and is now executing a
capacity expansion plan to supply demand in California before moving the brand beyond its home state.


In the Premium Regular segment, Coors Banquet gained market share and grew mid-single digits in the
fourth quarter and low-single digits for the year as it achieved its ninth consecutive year of growth.
According to Nielsen, Coors Banquet remains the only national Premium Regular brand that is growing, in
part due to the continued success of its “stubby” heritage bottle. The growth from Banquet offset a high-
single-digit decline for Miller Genuine Draft in the fourth quarter and a double-digit decline on the year,
resulting in the Premium Regular segment finishing down low-single digits in 2015.


The MillerCoors Below Premium portfolio decreased mid-single digits for the quarter and the year, driven
by a quarterly and yearly high-single digit decline of Milwaukee’s Best and Keystone Light. Miller High Life
declined mid-single digits in the quarter and the year, while Steel Reserve grew low-single digits during the
quarter and mid-single digits for the year due to the continuing success of the Steel Reserve Alloy Series,
the brand’s line of flavored malt beverages.


Financial Highlights for the Full Year and Fourth Quarter
Domestic net revenue per barrel grew 1.5 percent for both the year and the quarter as a result of favorable
net pricing and positive sales mix.


Total company net revenue per barrel, including contract brewing and company-owned distributor sales,
increased 1.4 percent for the full year and 1.3 percent for the quarter. Third-party contract brewing
volumes were down 2.5 percent for the year and 4.1 percent for the quarter.


Total COGS per barrel decreased 1.3 percent for the full year and 3.4 percent for the quarter, driven by
lower aluminum, fuel, corn and malt pricing, along with supply chain cost savings. These factors were
partially offset by brewery and freight inflation, and fixed-cost absorption due to lower volumes.


Marketing, general and administrative costs increased by 4.1 percent for the full year and 14.2 percent for
the quarter driven by higher brand investments, largely impacting the fourth quarter, and information
technology investments.


MillerCoors achieved $88 million of cost savings for the year and $25 million in the fourth quarter, primarily
related to procurement savings and brewery efficiencies.
Depreciation and amortization expenses for MillerCoors were $358.4 million for the year and $104.4 million
in the quarter. These results include accelerated depreciation related to the planned closure of the Eden,
North Carolina, brewery of $61.3 million in the year and $39.5 million in the quarter that are included in
special items. Additions to tangible and intangible assets totaled $377.7 million in the year and $145.7
million in the quarter.


Special items of $67.7 million for the year and $39.7 million for the quarter were recognized related to the
previously announced closure of the Eden Brewery, with additional special items expected to be
recognized through the third quarter of 2016, when the closure is expected to be completed. Additionally, a
special charge of $42.4 million for both the fourth quarter and the year resulted from an early settlement of
a portion of MillerCoors defined benefit pension plan liability.


                                                      ###
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. 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 fresh-pressed American juice.
The company imports world-renowned beers such as Italy’s Peroni Nastro Azzurro, the Czech Republic’s
Pilsner Urquell and the Netherlands’ Grolsch. MillerCoors also offers pioneering new brands such as the
Redd’s franchise 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 is in the beer and soft drinks business, bringing refreshment and sociability to millions of people
all over the world who enjoy our drinks. The company does business in a way that improves livelihoods
and helps build communities.

SABMiller is passionate about brewing and has a long tradition of craftsmanship, making superb beer from
high quality natural ingredients. Our local beer experts brew more than 200 beers from which a range of
special regional and global brands have been carefully selected and nurtured.

SABMiller is a FTSE-20 company, with shares trading on the London Stock Exchange, and a secondary
listing on the Johannesburg Stock Exchange. The group employs 69,000 people in more than 80
countries from Australia to Zambia, Colombia to the Czech Republic, and South Africa to the USA. Every
minute of every day, more than 140,000 bottles of SABMiller beer are sold around the world.

In the year ended 31 March 2015, SABMiller sold 324 million hectoliters of lager, soft drinks and other
alcoholic beverages, generating group net producer revenue of US$26,288 million and EBITA of US$6,367
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 a leading global brewer delivering extraordinary brands that delight the
world's beer drinkers. It brews, markets and sells a portfolio of leading premium brands such as Coors
Light, Molson Canadian, Carling, Staropramen and Blue Moon across The Americas, Europe and Asia. It
operates in Canada through Molson Coors Canada; in the US through MillerCoors; across Europe through
Molson Coors Europe; and outside these core markets through Molson Coors International. The company
is the only alcohol producer currently recognized for world class sustainability performance through the
Dow Jones Sustainability Index. It was listed on the World Index for the past four years and named global
Beverage Sector Leader in 2012 and 2013. Molson Coors is constantly looking for ways to improve its
Beer Print. For more information on Molson Coors Brewing Company visit the company's website,
http://molsoncoors.com or http://ourbeerprint.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, 2015, 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


 (In millions of $US)                           Dec 31, 2015        Dec 31, 2014         Dec 31, 2015           Dec 31, 2014

 U.S. GAAP: Net Income                            $     109.5         $     213.3            $    1,217.8        $   1,326.2
 Attributable to MillerCoors
 Plus: Special/Exceptional Items¹                        82.1                    -                  110.1                1.4

 Tax effect of the adjustments to
                                 2
 arrive at underlying net income                          (0.1)                  -                   (0.2)                 -

 Non-GAAP Underlying Net
 Income                                           $     191.5         $     213.3        $        1,327.7        $   1,327.6
 Adjustments to IFRS Underlying
                 3
 EBITA-Reported                                          25.1                25.4                   121.5               94.2

 Restatement Adjustments to IFRS
                           4                                 -                   -                          -            3.5
 Underlying EBITA-Restated

 IFRS: MillerCoors underlying                     $     216.6         $     238.7            $    1,449.2        $   1,425.3
 earnings before interest, taxes and
 amortization before exceptional
              5
 items (EBITA )

 Percent change versus prior year                      (9.3%)                                       1.7%
 MillerCoors underlying EBITA
          5
 Restated
 1
  Current year Special/Exceptional items include costs related to the planned closure of the Eden
 Brewery, including accelerated depreciation of $61.3 million for full year and $39.5 million in the
 quarter, and a charge resulting from the early settlement of a portion of our defined benefit pension
 plan liability. Prior year Special/Exceptional items include restructuring related costs.
 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
  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 certain special items between U.S. GAAP and IFRS. Amortization of
 intangible assets, interest, taxes and non-controlling interest has been removed to arrive at
 Underlying EBITA.
 4
  With effect from April 1, 2014, SABMiller adopted IFRS 10, “Consolidated Financial Statements.”
 The accounting standard has been applied retrospectively and results have been restated for
 SABMiller’s fiscal year ended March 31, 2014.
 5
     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,
                                     2015           2014                 2015           2014

 Total STW volume in
 barrels                               13,661           14,111             60,167           61,954

 Sales                          $     1,995.3     $    2,039.1      $     8,822.2     $    8,990.4

 Excise taxes                         (247.1)          (257.3)           (1,096.7)        (1,142.0)

 Net sales                            1,748.2          1,781.8            7,725.5          7,848.4

 Cost of goods sold                  (1,056.9)        (1,129.6)          (4,547.5)        (4,743.8)

 Gross profit                           691.3            652.2            3,178.0          3,104.6

 Marketing, general and
 administrative expenses              (495.7)          (434.1)           (1,828.7)        (1,755.9)

 Special items, net                     (82.1)            -               (110.1)             (1.4)

 Operating income                       113.5            218.1            1,239.2          1,347.3

 Interest income (expense),
 net                                     (0.6)            (0.1)              (1.6)            (1.1)

 Other income (expense),
 net                                      1.1                 1.2             5.7              5.5

 Income before income
 taxes and non-controlling
 interests                              114.0            219.2            1,243.3          1,351.7

 Income taxes                            (0.9)            (1.5)              (4.7)            (6.1)

  Net income                            113.1            217.7            1,238.6          1,345.6

 Net income attributable to
 non-controlling interests               (3.6)            (4.4)             (20.8)           (19.4)

 Net income attributable
 to MillerCoors LLC             $       109.5     $      213.3      $     1,217.8    $     1,326.2




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

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