Wrap Text
MillerCoors Q1 results
SABMiller plc
JSEALPHA CODE: SAB
ISSUER CODE: SOSAB
ISIN CODE: GB0004835483
MILLERCOORS DELIVERS 22.2% FIRST QUARTER UNDERLYING NET INCOME GROWTH
Coors Light and Miller Lite Improve Sales Performance, and Both Deliver Flat Sales to Retail
Volume in the Quarter for the First Time in the History of MillerCoors Joint Venture
May 3, 2016 (London and Denver) – SABMiller plc (LN:SAB; OTC:SABMRY) and Molson Coors
Brewing Company (NYSE: TAP; TSX: TPX) reported that MillerCoors first quarter underlying net
income grew 22.2 percent to $372.1 million versus the same period in the prior year. This income
growth was driven by lower cost of goods sold, higher net pricing, positive sales mix and timing of
shipments. For the fourth consecutive quarter, Coors Light and Miller Lite each gained share of the
Premium Light segment.
“Last fall, we laid out an aggressive three-year strategy to get to total volume growth by 2019. While
we have a great deal of work to achieve that ambition, this quarter we took positive strides with the
sales improvement of both Coors Light and Miller Lite, a strong launch of Henry’s Hard Sodas and
strengthening volume in our Above Premium portfolio,” said Gavin Hattersley, MillerCoors Chief
Executive Officer. “Our employees and our distributor system have rallied behind our brands and our
plans, and we are focused on working collaboratively and aggressively to achieve our goals.”
First 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. Quarterly sales-to-retailers volume (STRs) results are
presented on a trading-day-adjusted basis, as the first quarter of 2016 has one more trading day
compared with the same quarter in the prior year.
o Underlying net income, a non-GAAP measure, increased 22.2 percent to $372.1 million.
o Total net sales increased 2.3 percent to $1.816 billion.
o Domestic net revenue per barrel, excluding contract brewing and company-owned distributor
sales, increased 1.5 percent.
o Total cost of goods sold (COGS) per barrel decreased 5.0 percent.
o Domestic STRs decreased 1.3 percent.
o Domestic sales-to-wholesalers volume (STWs) increased 1.3 percent.
Brand Highlights for the First Quarter
Coors Light and Miller Lite improved volume performance and both delivered flat volume in the quarter
for the first time in the history of the MillerCoors joint venture.
Miller Lite gained share of the Premium Light segment for the sixth consecutive quarter, and STRs
were flat during the first quarter. The brand’s strong performance in the segment can be attributed to
the brand’s design and communications that celebrate Miller Lite’s unique heritage and history. Miller
Lite recently unveiled a new television ad campaign highlighting the brand’s authenticity and originality.
Coors Light gained share of the Premium Light segment for the fourth consecutive quarter, having its
best quarterly volume performance since the fourth quarter of 2012, with STR trends improving and
getting to flat in the quarter. Coors Light began to reassert its pride in the quality of the beer and its
heritage through a new marketing campaign launched in January. Known as “Climb On,” the campaign
makes a stronger emotional connection with beer drinkers, who know that climbing one’s personal
mountain is what makes life enjoyable.
Total MillerCoors Above Premium STRs finished up low-single digits for the quarter based on the
successful introduction of Henry’s Hard Soda in January. According to Nielsen, Henry’s Hard Orange
has the best velocity of any Hard Soda in the category since the fourth week of the brand’s launch, and
Henry’s Hard Ginger Ale is the number-one Ginger Ale. The Redd’s family declined low-single-digits as
growth in the Redd’s Wicked Brands and Redd’s Green Apple was more than offset by declines in
Redd’s Apple and Redd’s Strawberry.
The MillerCoors Tenth & Blake portfolio finished the quarter down low-single digits. The Blue Moon
Brewing Company STRs declined low-single digits for the quarter primarily due to a slower transition
from its winter seasonal to spring seasonal at retail. The decline was partially offset by the continued
growth of Blue Moon Belgian White. The Jacob Leinenkugel Brewing Company STRs were in line this
quarter, but its Shandy portfolio grew double digits, led by Grapefruit Shandy.
In the Premium Regular segment, Coors Banquet gained segment share and grew low-single digits for
the quarter. 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 partially offset a high-single digit decline for Miller Genuine Draft in the first quarter, resulting
in the Premium Regular segment finishing down low-single digits for the quarter.
The MillerCoors Below Premium portfolio decreased mid-single digits for the quarter, driven by high-
single-digit decline of Milwaukee’s Best and mid-single-digit declines of Keystone Light and Miller High
Life, while Icehouse grew low-single digits. Overall, the Steel Reserve franchise was down low-single
digits, however the Steel Reserve Alloy Series grew double digits for the quarter.
Financial Highlights for the First Quarter
Domestic net revenue per barrel grew 1.5 percent for 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 1.3 percent for the quarter. Third-party contract brewing volumes were down 1.3
percent for the quarter.
Total COGS per barrel decreased 5.0 percent for the quarter, driven by lower aluminum and fuel
pricing, along with supply chain cost savings. These factors were partially offset by brewery inflation.
Marketing, general and administrative costs increased by 5.3 percent for the quarter, driven primarily
by higher employee-related expenses and information technology investments.
MillerCoors achieved $18 million of cost savings in the first quarter, primarily related to brewery
efficiencies and procurement savings.
Depreciation and amortization expenses for MillerCoors were $117.1 million in the quarter. These
results include accelerated depreciation related to the planned closure of the Eden, North Carolina,
brewery of $35.9 million in the quarter that are included in special items. Additions to tangible and
intangible assets totaled $89.9 million in the quarter.
Special items of $36.9 million for the quarter were related to the previously announced closure of the
Eden Brewery, with additional special items planned through the third quarter of 2016, when the
closure is expected to be completed.
###
Overview of MillerCoors
Through its diverse collection of storied breweries, MillerCoors brings American beer drinkers an
unmatched selection of the highest quality beers, flavored malt beverages and ciders, 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, founded in 1995. Tenth and Blake also imports world-
renowned beers such as Italy’s Peroni Nastro Azzurro, the Czech Republic’s Pilsner Urquell and the
Netherlands’ Grolsch. MillerCoors also operates Crispin Cider Company, an artisanal maker of pear
and apple ciders using fresh-pressed American juice, and offers pioneering new brands such as the
Redd’s Apple and Redd’s Wicked Apple franchises, Smith & Forge Hard Cider and Henry’s Hard
Sodas. MillerCoors seeks to become America’s best beer company through an uncompromising
dedication to 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-10 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 was listed on the Dow Jones World Sustainability Index for the past four
years and named global Beverage Sector Leader in 2012 and 2013. In 2015, the company was the
only alcohol producer recognized on the Index for World Class Sustainability performance. 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
March 31, March 31,
(In millions of $US) 2016 2015
U.S. GAAP: Net Income $ 335.3 $ 304.6
Attributable to MillerCoors
Plus: Special/Exceptional Items¹ 36.9 -
Tax effect of the adjustments to
2
arrive at underlying net income (0.1) -
Non-GAAP Underlying Net
Income $ 372.1 $ 304.6
Adjustments to IFRS Underlying
3
EBITA-Reported 22.3 40.6
IFRS: MillerCoors underlying $ 394.4 $ 345.2
earnings before interest, taxes and
amortization before exceptional
4
items (EBITA)
Percent change versus prior year 14.3%
4
MillerCoors underlying EBITA
1
Current year Special/Exceptional items include costs related to the planned closure of the Eden
Brewery, including accelerated depreciation of $35.9 million in the quarter.
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, 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
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
March 31, March 31,
2016 2015
Total STW volume in
barrels 13,857 13,721
Sales $ 2,069.3 $ 2,025.8
Excise taxes (253.2) (251.2)
Net sales 1,816.1 1,774.6
Cost of goods sold (1,033.0) (1,076.2)
Gross profit 783.1 698.4
Marketing, general and
administrative expenses (409.7) (389.1)
Special items, net (36.9) -
Operating income 336.5 309.3
Interest income (expense),
net (0.5) (0.3)
Other income (expense),
net 1.6 1.3
Income before income
taxes and non-controlling
interests 337.6 310.3
Income taxes 0.5 (1.1)
Net income 338.1 309.2
Net income attributable to
non-controlling interests (2.8) (4.6)
Net income attributable
to MillerCoors LLC $ 335.3 $ 304.6
JSE Sponsor: J.P. Morgan Equities South Africa (Pty) Ltd
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