Molson Coors Brewing Company
) reported fourth quarter and full year 2013 results. Adjusted
earnings of 68 cents in the fourth quarter missed the Zacks
Consensus Estimate of 72 cents per share by 5.6%. The results
also declined 1.4% from the prior-year earnings of 69 cents per
share due to lower sales.
Revenues and Operating Profits
Net sales, including excise tax, declined 0.2% to $1.03
billion in the fourth quarter, due to unfavorable foreign
exchange. Sales however beat the Zacks Consensus Estimate of $1
Sales volume increased 2.3% year over year to 7.06 million
hectoliters but declined 21.2% sequentially due to weak consumer
demand across all markets owing to macro-economic headwinds.
Total worldwide beer volume increased 0.1% to 14.1 million
hectoliters, but was lower than 17.0 million hectoliters in the
sequentially preceding quarter.
Underlying (excluding special and other non-core items)
pre-tax income increased 6.5% year over year to $163.9 million in
the fourth quarter of 2013, driven by improved performance in the
U.S. and Europe and lower underlying interest expense. Currency
did not impact fourth quarter underlying pre-tax income.
The company operates through the following geographical
Molson Coors Canada net sales declined 1.7% to $463.3 million in
the quarter, despite a 2.4% increase in sales volume. The segment
reported underlying pretax income of $86.9 million, down 14% from
the prior-year quarter due to weak consumer demand and a weaker
Canadian dollar compared to the U.S. dollar. On a constant
currency basis, underlying pretax income declined 9.0%.
United States (MillerCoors):
MillerCoors' net sales increased 1.0% to $1.08 billion in the
fourth quarter of 2013. MillerCoors' underlying net income
increased 30.2% to $241.9 million driven by stronger pricing,
brand mix and cost reductions, partially offset by the impact of
higher commodity costs and lower volumes. Sales volume declined
1.8% in the quarter.
The segment includes the operations of the U.K. segment combined
with the results of operations for Central Europe, excluding the
Central Europe global export and license business.
The segment reported net sales growth of 0.9% to $527.8
million in the fourth quarter of 2013. Sales volume also
increased 1.5%, owing to improved performance in the U.K.,
Romania, Hungary and the Czech Republic, which was partially
offset by weak demand particularly in Serbia and Bulgaria. The
segment's underlying pretax income improved 11.8% to $39.7
million, driven by volume growth, positive pricing, lower supply
chain costs and favorable currency movements.
Molson Coors International (MCI):
Segment net sales declined 1.5% to $38.2 million in the quarter.
Sales volume including royalty volume also declined 3.6% due to
industry weakness in Ukrainian license markets and the negative
impact of transferring the Carling travel and export business to
the Europe segment. This decline was partially offset by strong
growth in Mexico and Latin America.
The segment posted an underlying pretax loss of $5.6 million
in the fourth quarter, down from an income of $0.3 million in the
year-ago period due to transfer of the Carling travel and export
business to the Europe segment.
Full Year 2013 Results
For 2013, Molson Coors reported adjusted earnings of $3.95 per
share, missing the Zacks Consensus Estimate of $3.99 per share by
1%. Earnings however increased 1% from the prior-year earnings of
$3.91 per share, owing to higher sales. Net sales, including
excise tax, grew 7.4% to $4.21 billion in 2013. Sales also beat
the Zacks Consensus Estimate of $4.20 billion.
Other Financial Update
During the quarter, the board of Molson Coors increased its
quarterly dividend by 16%. The new dividend of 37 cents per share
will be paid on Mar 17, 2014 to shareholders of record as of Feb
Molson Coors has struggled hard in the past one year owing to
weak consumer demand in the face of macro-economic headwinds. We
also note that Molson Coors has been struggling in terms of sales
volume for the past three years. However, we believe that the
company's initiatives and increased marketing investments in its
brands will drive volumes in the coming quarters.
While Molson Coors currently holds a Zacks Rank #4 (Sell),
Constellation Brands Inc.
) is a better-ranked stock with a Zacks Rank #1 (Strong Buy).
Other consumer staple companies worth considering include
Post Holdings Inc.
Hain Celestial Group Inc.
), both of them carrying a Zacks Rank #2 (Buy).
HAIN CELESTIAL (HAIN): Free Stock Analysis
POST HOLDINGS (POST): Free Stock Analysis
CONSTELLATN BRD (STZ): Free Stock Analysis
MOLSON COORS-B (TAP): Free Stock Analysis
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