Molson Coors Brewing Company
) reported adjusted earnings of $1.37 per share in the third
quarter of 2012, exceeding earnings of $1.14 in the year-ago
quarter by 20.0%. The results beat the Zacks Consensus Estimate
of $1.34 per share.
Though the company has been facing challenging market
conditions, Molson Coors' earnings were positively impacted by
strong sales growth driven by improved performance in the U.S.
segment and addition of Central Europe in the reported
In addition, Molson Coors continues to focus on its strategy
of maximizing profitable growth opportunities in the core markets
and expanding into new and emerging markets.
Revenues and Operating Profits
Net sales, including excise tax, grew 7.0% to $1.195 billion
in the quarter compared with $0.954 billion reported a year ago.
It, however, lagged the Zacks Consensus Estimate of $1.252
billion. Total worldwide beer volume increased 30.8% in the
quarter to 17.2 million hectoliters in the third quarter of
Underlying (excluding special and other non-core items)
pre-tax income increased 21.2% year over year to $305.6 million
in the third quarter of 2012, despite the impact of unfavorable
The company operates through the following geographical
: Molson Coors' Canada segment net sales declined to $580.1
million (including excise tax) from $598.9 million in the
year-ago period. Sales volume decreased 4.1% to 2.4 million
hectoliters in the quarter. The segment reported underlying
(excluding special and other non-core items) pretax income of
$150.7 million, down 7.1% from the prior-year quarter. Improved
pricing and cost reductions more than offset the lower volume,
higher-cost products, pension expense and foreign currency
: The segment includes the operations of its subsidiary,
MillerCoors, a joint venture with SABMiller. Molson Coors has a
42% share in MillerCoors and income from the joint venture is
reflected as equity income for Molson Coors.
Molson Coors' underlying U.S. segment pretax income increased
16% to $139.9 million in the quarter.
MillerCoors' net sales climbed 2.0% to $1.99 billion in the
third quarter of 2012. Sales volume declined 1.5% to 19.8 million
hectoliters in the quarter from 20.1 million hectoliters in the
: Molson Coors' United Kingdom segment net sales slipped 4.2% to
$313.5 million (including excise tax) from the prior-year period.
Sales volume declined 3.2% to 2.14 million hectoliters in the
third quarter of 2012. The segment reported underlying (excluding
special and other non-core items) pre- tax income of $10.1
million, down 63.1% from the prior-year quarter, due to volume
decline and increase in pension cost offset by cost saving
: Molson Coors' Central Europe segment includes the
newly-acquired nine breweries of Molson Coors Central Europe
(known as StarBev prior to the acquisition) in June.
Molson Coors' Central Europe segment reported net sales of
$264.2 million (including excise tax) in the third quarter of
2012, down 14% from the prior-year quarter. Sales volume declined
1.4% to 4.18 million hectoliters in the quarter. The segment
reported underlying (excluding special and other non-core items)
pretax income of $79.8 million, down 2.2%, due to foreign
: The segment's net sales surged 38.3% to $43 million in the
quarter. Sales volume increased to 0.364 million hectoliters from
0.254 million hectoliters in the previous-year quarter.
The segment reported underlying (excluding special and other
non-core items) pretax loss of $7.7 million, wider than a loss of
$7.2 million in the prior-year quarter, due to incremental brand
investments, partially offset by volume growth in Europe and
Latin America, including Central Europe export results this year.
The Central Europe export business contributed underlying pretax
income of $2.8 million in the third quarter.
Overall, we are encouraged with the company's strong brand
portfolio, continuous innovation and cost-saving initiatives.
Moreover, we believe that the company's acquisition of the
Central Europe business is significant because it brings on board
StarBev's flagship brand Staropramen and helps it to expand in
untapped markets. However, the company's susceptibility to the
global economic downturn predominantly in mature and low-growth
markets, coupled with currency headwinds undermine its growth
prospects and profitability.
Molson Coors competes with
Anheuser-Busch InBev SA
) and carries a Zacks #3 Rank (a short-term Hold rating). We have
a Neutral recommendation on Molson Coors over the long term.
ANHEUSER-BU ADR (BUD): Free Stock Analysis
MOLSON COORS-B (TAP): Free Stock Analysis
To read this article on Zacks.com click here.